Essar Oil was given time till May 31 to pay up its equity subscription but had not been able to do so. Company officials had reiterated that this was merely a ``procedural delay'' and that there was no question of not coughing up the dues.

The company, it may be recalled, had only recently paid part of its outstandings 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.

Reports doing the rounds indicate that the Unit Trust of India and IDFC are keen on buying out Essar Oil's stake if there is no indication of the money coming after December 31. Interestingly, Oil Indiahad also sent feelers to pick up Essar's 10 per cent holding but this would not have worked as the combined PSU holding in Petronet is already 50 per cent taken up by IOC, HPCL and BPCL.

The whole idea of forming the joint venture was to ensure that it would be a private company where PSU participation would be confined to 50 per cent. This is akin to Petronet LNG where IOC, ONGC, GAIL and BPCL have equity of 12.5 per cent each.

Of the two, IDFC is reportedly more inclined towards picking Essar Oil's stake though talks are still at a ``very preliminary stage.'' In the opinion of experts, this makes sense as pipelines hold the key to efficient transportation of petro-products in the future. The idea of a common carrier principle would ensure steady supply of products and minimise the cost of transportation. The network would also help bridge the projected shortfall in inland movement capacities.

Apart from the three oil PSUs and Essar Oil, the other stakeholders (with 10 per cent each) in Petronet Indiaare Reliance Petroleum (RPL), State Bank of India, ICICI and Infrastructure Leasing & Financial Services. IBP, the stand-alone marketing oil PSU, will pick up 2 per cent from IOC's 18 per cent stake shortly, sources say.

Essar Oil and RPL will, incidentally, hold 13 per cent each in the equity 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 12 per cent stake in the Rs 4,400 crore Central India pipeline which was originally the brainchild of RPL. The ministry of petroleum and natural gas still has given its in-principle approval for the equity structure of the project where Petronet, IOC and RPL will hold 26 per cent each with the balance taken up byEssar Oil and an FI.