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Murali Gopalan
Mumbai, July 1: Essar Oil is yet to pay up the amount due for its 10 per cent stake in Petronet India, the joint venture pipelines company formed in May 1997. Top sources said that the deadline of May 31 had long lapsed and there was no indication when the money (roughly Rs 10 crore) would be received.
Essar officials, when contacted, clarified that this was a "procedural issue" and that there was no question of not paying up.
They added that the company had only recently paid part of its dues for the Vadinar-Kandla pipeline being executed under the Petronet umbrella. "Essar Oil is committed to meeting its equity stake obligation in Petronet and it is only a matter of time before this is done," company officials said.
However, industry sources say that the Petronet India board is now seriously considering offering the Essar Oil equity component to another strategic or financial investor if the delay in payment persists.
This is largely because all the other stakeholders have already subscribed totheir portion and there are many interested companies, both from here and abroad, keen on participating in the equity of Petronet.
At present the three oil PSUs -- IOC, BPCL and HPCL -- account for 50 per cent of Petronet's equity with 10 per cent apiece allotted to Essar Oil, Reliance Petroleum (RPL), ICICI, State Bank of India and the Infrastructure Leasing & Financial Services.
There were other contenders for a stake but finally it was decided that both Essar Oil and RPL be given berths as they were commissioning refineries whose products would need to be evacuated by pipelines.
It now remains to be seen if another partner would be considered at this stage in the event of Essar Oil not paying up its subscription on time. Sources say that an extension in the deadline is possible as the Essar group needs to settle other pressing issues with the financial institutions before even thinking of coughing up its dues in Petronet India.
Essar Oil and RPL will, incidentally, hold 13 per cent each in theequity of Petronet-VK, the company responsible for executing the Rs 400 crore Vadinar-Kandla pipeline scheduled to be operational by the end of this year. The 113 kilometre network will evacuate the products from the RPL refinery (and Essar's also when it is commissioned in 2001) to Kandla from which point they will be transported through IOC's Kandla-Bhatinda pipeline.
Essar Oil is also being considered for a 11 per cent stake in the Central India pipeline which was originally the brainchild of RPL.
The ministry of petroleum and natural gas still has not finalised the equity structure for the project though two alternatives are under review. One will involve Petronet India holding 51 per cent, RPL 26 per cent, Essar Oil 11 per cent while the balance will be taken up by a financial institution.
The other is allotting 26 per cent each to Petronet, IOC and RPL with the balance taken up by Essar Oil and an FI.
The stakes have been roughly computed based on the individual refining capacities of Essar Oil(10.5 million tonnes) and RPL (27 million tonnes).
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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