As per the current thinking in Government circles, Petronet India will hold a 51 per cent stake in CIPL while 10 per cent will be offered to a financial institution. None of the three oil PSUs -- Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation -- will participate in the equity of the pipeline company.

While officials in New Delhi were unavailable for comment on the issue, sources said this is among the several options being considered by the Government. The most preferred route would have been Petronet picking up 26 per cent, as is the practice for its other pipelines, with possiblyRPL accounting for an identical stake. The balance could have been offered to Essar Oil and the three oil PSUs.

"This is a difficult option as it is almost impossible to keep the public sector oil companies happy," sources said. The next best bet was to keep them out of the equity structure of CIPL given that the three have adequate representation in Petronet in the form of a combined 50 per cent stake. RPL and Essar Oil hold 10 per cent each in the equity of Petronet.

"The three oil PSUs have nothing to lose by not participating in the equity of CIPL. The holding company, Petronet, will actually represent their interests with a 51 per cent stake and this is an important point as it holds only 26 per cent in other pipeline projects," sources said. Also, it would have been difficult to conceptualise an equity holding pattern involving Petronet, RPL, Essar Oil, IOC, BPCL and HPCL.

In the opinion of experts, it makes sense to keep RPL and Essar Oil in the equity structure of CIPL given that it is theirrefineries which will be contributing to the bulk of product movement in the pipeline. The combined capacities of the two projects will be 32 million tonnes -- RPL's at 21.5 million tonnes and Essar's at 10.5 million tonnes.

The CIPL network will begin from Jamnagar and reach Koyali where a new product storage terminal of Indian Oil Corporation's Gujarat refinery is being planned. Rajkot is proposed to be an intermediate delivery point en route.

The products of IOC's Gujarat refinery will be injected into the system at Koyali. The provision of connecting CIPL with IOC's Koyali-Ahmedabad and Koyali-Navagam pipelines at Koyali has also been made for flexibility in the supply source.

From Koyali, the pipeline will extend to Ratlam where it will be bifurcated into two networks. The northern trunk pipeline will go to Kota and terminate at Gwalior while a 180 kilometre branch pipeline is planned from the Ratlam-Kota section.

The other network, the southern trunk pipeline, will pass through Itarsi andthereon to Nagpur. It shall either be terminated here or be extended up to Hyderabad depending upon the viability of the Nagpur-Hyderabad section. Branch pipelines are planned for Indore and Bhopal from the Ratlam-Itarsi section.

The cost of the CIPL project has been estimated at around Rs 4,400 crore and assuming a debt, equity ratio of 3:1, the stakeholders will have to contribute Rs 1,100 crore.

It was in October last year that RPL submitted its pipeline plan which involves constructing a 550 km network from Jamnagar to Indore via Ahmedabad. In the second phase, the company planned to extend this from Indore to Hyderabad via Bhopal and Nagpur. Two branch pipelines were also part of the proposal -- one from Ahmedabad to Patna via Udaipur, Kota, Gwalior, Kanpur and Allahabad and the other from Ahmedabad to Hazira.

Petronet objected to the plan in a communique to the petroleum ministry as this project was planned by RPL on its own unlike others which came under the Petronet umbrella. The apprehensionthen was that oil PSUs would also build pipelines on their own without routing them through Petronet. The other problem was that the RPL plan could even jeopardise some projects of Petronet like Koyali-Ratlam, Bina-Jhansi-Kanpur and Paradip-Rourkela-Ranchi-Allahabad.

While this issue was being sorted out, Essar Oil submitted a proposal for a pipeline from Jamnagar to Ahmedabad and thereon to Meerut via Ratlam, Kota and Faridabad. A spurline was also planned from Kota to Jhansi, Kanpur and Allahabad. A committee was set up to examine these projects as also those planned by Petronet and it was decided that while finalising the modified CIPL, the northern branch would terminate at Gwalior.