Reliance Petroleum and Essar Oil have opted for 5 per cent equity each in Petronet Vadinar-Kandla, which is among the three Petronet India subsidiaries that were registered as companies recently. The other two Petronet subsidiaries are Petronet Mangalore-Hasan-Bangalore and Petronet Cochin-Karur.

Petronet India has a 26 per cent stake in the subsidiaries, and the lead operator among the user oil companies controls another 26 per cent of their equity. Financial institutions and other companies, including user oil companies, will hold the remaining shares of the Petronet subsidiaries.

Indian Oil Corporation (IOC) will be the lead operator for Petronet VK (Vadinar-Kandla), a 100 km long pipeline along the sea bed, that will carryimported petroleum products for canalising agency, Indian Oil. The pipeline, located roughly 50 km from the site of Essar Oil and Reliance Petroleum's giant refineries at Jamnagar, will also evacuate products of these two refineries.

Indian Oil has a marketing arrangement with Essar and Reliance, the oil refineries of which will go on stream before oil industry marketing rights are freed in the year 2002. Petronet India director SK Kapoor told The Financial Express that Reliance Petroleum and Essar Oil may together be allowed to hold upto 26 per cent of the equity in Petronet VK, at a later date.

The Vadinar-Kandla pipeline will, in the long run, connect the west coast to the burgeoning petroleum products market in north India, through Indian Oil's 1441 km long Kandla-Bhatinda pipeline, Petronet VK will initially have a capacity to transport seven million tonne of petroleum products.

The throughput of the coastline pipeline will subsequently be raised to 12 million tonne per annum. The Rs 250 croreproject will be set up within the coming 24 months, and it will have a debt to equity ratio of 1:2.

Reliance Petroleum's 18 million tonne-capacity refinery will concentrate more on middle distillates, like diesel and less on heavy ends like fuel oil, which will to an extent determine the product mix of Petronet VK as well.

The 365 km long pipeline being executed by Petronet MHB (Mangalore-Hasan-Bangalore) will essentially carry motor spirit, high speed diesel, superior kerosene oil and naphtha. The pipeline will evacuate products for lead operator, Hindustan Petroleum Corporation Limited (HPCL), which has the marketing rights for the Mangalore Refinery and Petrochemicals Limited (MRPL). Petronet MHB will have a throughput of 5.5 million tonne per annum.

Petronet CK (Cochin-Karur) will evacuate products for lead operator Bharat Petroleum Corporation Limited, which has the marketing rights for Cochin Refineries. Cochin Refineries is expected to opt for 26 per cent stake in Petronet CK, in the long run,just as MRPL is expected to pick up 26 per cent of the equity of Petronet MHB.

Petronet India plans to set up 12 product pipelines altogether, all of which will be executed and operated by subsidiary companies. Petronet India was promoted by Indian Oil, HPCL, BPCL and a group of financial institutions, led by the Infrastructure Leasing and Finance Services (ILFS).