Cabinet approval has been sought to sell 26 per cent of the Centre's holding in EIL to IOC but this may have to wait till the political turmoil is over in New Delhi. While IOC officials were unavailable for comment on the issue, top industry sources confirmed that the oil PSU was "not too averse" to the idea of offering up to ten per cent to a company like Larsen & Toubro or Reliance Petroleum (RPL).

"Both would be acceptable candidates because of the obvious synergies involved. L&T already has a working relationship with EIL while in the case of RPL, it makes sense too given its enormous exposure to project development. And, in any case, IOC has a long term agreement with RPL which would strengthen further with a common interest in EIL," experts say.

There have also been unconfirmed reports which indicatethat IOC would be more comfortable if the government makes a complete exit from EIL. Sources say that this would encourage a greater sense of flexibility in operations. Roping in players like L&T or RPL would also impart more professionalism in EIL, they add.

Interestingly, a two member team from L&T and EIL has been formed to explore areas of synergistic cooperation for joint bidding of onshore projects. This would include process sectors like refineries expansion projects as in IOC's at Digboi and Barauni as also petrochemical plans coming up in the next two years.

Similarly, L&T and EIL have jointly bid to the Oil and Natural Gas Corporation (ONGC) for a clamp-on related modifications and submarine pipelines project. This consists of installation of 33 km of water injection submarine pipelines besides associated topside modification on 26 well/process platforms in Bombay High and Heera fields.

The scope includes survey of platforms and pipelines, design & detailed engineering, procurement,transportation, laying, modification, hook-up, testing and pre-commissioning. The $50 million project is scheduled for completion by end April/mid May 2000.

More recently, the ONGC has awarded a contract to the EIL-L&T combine for a pipelines & platform modification project for $41.85 million. The plan envisages laying approximately 42 km of submarine pipelines with 17 risers and topsides modification on 18 well/process platforms in Bombay High and Neelam fields. The scope includes pre-engineering surveys, detailed engineering, project management, procurement, fabrication and commissioning on turnkey basis. These facilities are to be completed by May 15, 2000 and will enhance ONGC's oil production.

As observers reiterate, there is enormous justification in roping in L&T for a disinvestment programme concerning EIL. Not only would this help both companies but the good parts of corporate governance, which L&T is renowned for, could percolate down to the alliance.