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Murali Gopalan
Mumbai, June 6: The Indian Oil Corporation (IOC) and the Oil and Natural Gas Corporation (ONGC) have decided to shelve their earlier plan of combining two power projects in Gujarat into one. The oil PSUs will now pursue each of these separately while contributing to the equity of both projects.
Under the revised plan being worked out, IOC and Marubeni of Japan will hold 26 per cent each in the 500mw Sawli project. ONGC will be offered up to 24 per cent so that the joint venture remains a non-Government company. In the other project in Surat, where a 300mw plant is proposed to be set up, the National Thermal Power Corporation (NTPC) will pick a 26 per cent stake while the balance 24 per cent will be shared by IOC and ONGC.
"The two oil firms have decided that it makes more sense to pick a stake in both projects as there is tremendous demand potential in Gujarat. Apart from this, the fact that NTPC will be the lead promoter in one gives ample scope for IOC and ONGC to consider another project comfortably,"sources said.
With this move, it is quite clear that the two oil giants have made clear their intention to work together in key petro-related activities. ONGC has already committed itself to participating in not only these power projects but also in refining and marketing where it has zeroed in on the nine-million-tonne Paradip refinery being commissioned by IOC and Kuwait Petroleum Corporation.
It is only in petrochemicals that there is a fair degree of trepidation as the industry is not in the best of shape worldwide which has taken its toll on operations here. Experts also say that there is a danger of overcapacity which has compelled ONGC to take a good, hard look at its paraxylene project initially planned in Hazira as a joint venture with Bharat Petroleum Corporation and now with IOC.
However, this is not likely to materialise for a while now and even IOC's own plans for a petrochemicals complex in Panipat could take the backseat for a while now. Sources say that ONGC would not be too inclined atthis stage to participate though Petronas of Malaysia and the Indian Petrochemicals Corporation have been invited by IOC to join as partners.
What has emerged clearly is that power has been identified as top priority by both IOC and ONGC. The companies had indicated their interest to enter this area when the previous budget announced a five-year tax holiday for power projects commissioned between October 1, 1998 and September 30, 2003.
It was around this time that ONGC entered into an MoU with NTPC for the Surat project and some time later decided to join hands with IOC for selective projects both here and abroad.
In the Sawli power plan being promoted by IOC, there have been unconfirmed reports that Larsen & Toubro is also likely to be offered a stake of around 20 per cent. If this happens, almost the entire equity component of the project will be sewn up. Sources say that work will begin in right earnest shortly so that the projects are commissioned in less than three years from now.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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