New Delhi, June 16: With the rumours of the much-talked about 27 million tonne Reliance Petroleum refinery going on stream gaining ground, punters have zeroed in on the scrip. Expectations of the implementation of the project ahead of shedule has sent the stock soaring. The stock has zoomed to freeze at the upper end of the filter at Rs 24.45 on the Bombay and the National stock exchnages. The volume on Wednesday surged to over 16 lakh shares on the BSE and the outstanding order at NSE stood at over 4 lakh shares.The market is expecting the refinery to go on stream any time now. ``The company is likley to spring a surprise by announcing the implementation in June itself,'', said an FII dealer. The counter has attracted heavy investment buying in the past, but the rise on Wednesday was led by a huge buy order from at least three foreign institutional investors. Although the unit-wise commissioning process has already begun, but no official word has come in from the company about the exact date ofcommissioning. The commissioning was earlier expected in the second quarter of 1999-2000, at least six months ahead of schedule.
The 27 million tonne refinery in Jamnagar would cost around Rs 14,250 crore. Together with infrastructure like port, a power plant etc., the total investment will total Rs 25,000 crore. The promoter, Reliance Industries has committed to invest Rs 2,400 crore in Reliance Petroleum through preference share issue. Its stake in the company, now at 39.5 per cent will rise to 50 per cent after all the conversions.
The Supreme Court's directive on vehicular emission recently augurs well for the company. With none of the public sector oil companies meeting Euro II benzene levels, Reliance Petroleum's refinery is ready to meet the norms. The development had a positive impact on the stock which reached its all-time high of Rs 26 before dropping back to Rs 22.
Due to capacity enhancement to 27 million tonnes, the capital cost per tonne of Reliance Petroleum's refinery has declined by 15per cent from Rs 6,238 per tonne to Rs 5,278 per tonne. The refinery will sell between 25 to 30 per cent of its output to its promoter, Reliance Industries while for the remaining, agreement has been signed with Indian Oil Corporation (IOC). IOC and RPL had earlier signed an agreement for marketing the petroleum products proposed to be produced by RPL refinery at Jamnagar in Gujarat. The 10-year agreement between the two specifically covers marketing arrangements, both during the transition period (upto dismantling of the administered pricing mechanism) and post-transition period (after APM dismantling).
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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