According to sources in the industry, top management of BPCL had turned down the Union Cabinet's decision to divest the Navarathna oil PSU's stake in the Petronet LNG Ltd, the Rs 1,200-crore pipeline company floated to develop import, storage and distribution facilities for LNG in the country. Sources said, BPCL board, which met a couple of days back has refused to consider the divestment proposal and said that the company will not opt out fromjoint venture. BPCL management has also lodged their objection with the Petroleum Ministry in this regard, sources added. Sources said, with both the Navarathana oil PSUs turning down the divestment proposal, the equity structuring of the dream project is likely to be delayed further.

Sources said by virtue of the newly found navarathna status, the oil PSUs director board could take independent decisions on investment proposals and the government could do precious little to veto them. "Both IOC and BPCL have conveyed the decision to the Central government and the ministries concerned. The ball is now in the government's court", a source said.

Petronet LNG was incorporated two years back with equal equity participation by by four public sector hydrocarbon majors, GAI), ONGC, IOC and BPCL. The public sector hydro carbon giants were to keep 51 per cent equity in the country's first pipeline venture leaving the remaining stake to financial institutions, technological partner and others.

However, theequity structuring of the venture ran into rough weather with the National Thermal Power Corporation (NTPC) staking claims for picking up majority equity in the venture. NTPC had made its case through the Union power ministry for taking a 26 per cent stake in the venture arguing that they were branching out to LNG-based power generation. The move was met with stiff resistance from oil PSUs who contended that with their strong moorings in the hydrocarbon industry and the predicted phasing out of naphtha, entry into LNG business was a matter of synergy for them.

Following the row, the Central government in association with ministries concerned had stepped in to work out a compromise formula to resolve the crisis. The Cabinet note being finalised in this regard has paved the way for the exit of oil companies from the venture, subject to their respective boards approval. The note, earmarked 51 per cent of stake to GAIL, ONGC and NTPC together while the remaining being offered to financial institutions andothers. The two oil PSUs are given the option of picking up majority stakes in the two separate subsidiaries being promoted by the Petronet LNG.Petronet LNG is setting up three LNG terminals, one each in Kochi, Dahej and Ennore by floating three different subsidiaries. The 2.5-million tonnes per annum (TPA) Petronet Kochi Terminal is estimated to cost Rs 1,500 core while the Dahej terminal will have a capacity of 5 million (TPA). The third LNG terminal is planned at Ennore for which Petronet had tied up with Tamil Nadu Industrial Development Corporation (TIDCO). The Kochi and Dahej projects are slated to be commissioned in 2202.