Mumbai, Apr 12: The board of Mangalore Refinery and Petrochemicals (MRPL) is still undecided on the company participating in the equity of the Mangalore-Bangalore pipeline being commissioned by Petronet India in 2002. MRPL has been offered a 26 per cent stake in the project which, as per present estimates, works out to an outgo of nearly Rs 46 crore.The other stakeholders in the pipeline are Petronet and Hindustan Petroleum Corporation (HPCL) which will hold 26 per cent each. Both have agreed to subscribe to their equity portion while the balance is proposed to be offered to financial and strategic investors.
Sources have hinted that MRPL could be taking its time on participating in the project as its partner in the refinery, HPCL, will in any case account for a 26 per cent stake. The pipeline has been designed to evacuate products from MRPL and it was, hence, understood that the company would logically participate in the equity of the project.
"Even if MRPL decides to opt out of the pipeline, awarehousing arrangement can be worked out where another player can pick up the stake and subsequently offload it back in favour of the company," sources said.
MRPL, it may be recalled, is a 26:26 joint venture between the AV Birla group of companies and HPCL. Its capacity is currently being expanded from three million tonnes to nine million tonnes and possibly to 12 million tonnes by the time the oil sector is completely deregulated in 2002.
The Mangalore-Bangalore pipeline (MBPL) is proposed to be set up by Petronet-MHB, a joint venture of Petronet, HPCL and MRPL. It will be 364 km long and designed for the final throughput of 8.5 million tonnes. However, other facilities like a pumping system and loading facilities are currently designed for a throughput of 5.6 million tonnes. The pipeline will transport motor spirit, superior kerosene oil, high speed diesel, aviation turbine fuel and naphtha.
It will cater to the consumption zones of Karnataka and Andhra Pradesh and would be configured as:
a despatch terminal at Mangalore consisting of mainline and booster pumps, pig launchers, sump pump and tank; a tap off terminal-cum-intermediate station; and a receiving terminal at Devengothi.The consumption zones to be fed by the pipeline are Hassan, Mysore, Shimoga, Coorg, Chickmagalore, Chittradurga, Bangalore, Tumkur, Kolar, Mandya (Karnataka) and Guntakal, Ananthapur, Kurnool and Mehboobnagar (Andhra Pradesh). The projections indicate that supply from MRPL needs to be augmented by imports at Mangalore port to meet the local demand. Inclusive of the demand for naphtha, the demand to be catered by MBPL during 2001-02 and 2006-07 will be four million tonnes and six million tonnes respectively.
Project cost of pipeline revised upwards
The cost of the Mangalore-Bangalore pipeline has been revised upwards from Rs 707 crore to Rs 747 crore. This has been due to a change in specifications as also costlier price of imports, thanks to the stronger dollar. However, sources havereiterated that the increased cost is not the reason for MRPL's delayed decision in picking up a stake in the project.
The revised estimates indicate that based on a 3:1 debt-equity ratio, the equity component will be Rs 187 crore while debt will account for Rs 561 crore. Consequently, HPCL and Petronet will now need to pump in around Rs 48 crore apiece as their equity portion.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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