Hindustan Petroleum Corporation, along with Petronet India, will hold 26 per cent in the equity of the pipeline. Once MRPL also decides to subscribe to its equity component, the balance 22 per cent will be raised from other strategic and financial investors. MRPL is expected to take a decision by the first week of January next year.

"The company is most likely to pick up its 26 per cent stake because the whole idea of building the pipeline is to evacuate products from its facility," sources said. The equity outgo for MRPL will be around Rs 45 crore, based on a 3:1 debt, equity ratio for the project which costs Rs 707 crore.

MRPL, it may be recalled, is planning to expand capacity to nine million tonnes from the present three million tonnes. A 26:26 joint venturebetween HPCL and the AV Birla group of companies, the refinery is expected to play a major role in meeting demand for petro-products from the western region. It is a strategic part of HPCL's plans for the future along with its other facility being planned in Bhatinda, Punjab.

The Mangalore-Bangalore pipeline (MBPL) is proposed to be set up by Petronet-MHB Ltd, a joint venture of Petronet, HPCL and MRPL. It will be a 364 kilometre long multi-product pipeline from MRPL to Bangalore. The pipeline will be designed for the final throughput of 8.5 million tonnes but other facilities like a pumping system and loading facilities are currently designed for a throughput of 5.6 million tonnes.

MBPL will transport motor spirit, superior kerosene oil, high speed diesel, aviation turbine fuel and naphtha. Its objective is to cater to consumption zones of Karnataka and Andhra Pradesh.

As per the current plans the project would be configured as a despatch terminal at Mangalore consisting of mainline and booster pumps,pig launchers, HT DG sets, sump pump and tank; a tap off terminal-cum- intermediate pumping station; and a receiving terminal at Devengonthi.

There will be hard-cut facilities at Hassan so that products are transported simultaneously towards the Hassan and Devengonthi terminals in Bangalore.

INSIGHT
Tangible benefits

It is well known that MRPL's profitability has been affected after decontrol of five petro-products in April 1998. However, the cash outgo of the company is only Rs 45 crore as part of the equity for the pipeline. Further, the benefits from this pipeline network are very high as it will make the company's product accessible at much cheaper rates.