While company officials were unavailable for comment on the issue, top industry sources said this was being done to ensure that neither Indian Oil Corporation (IOC) nor Reliance Petroleum (RPL) would participate in the equity of the project. "HPCL is the lead manager of the pipeline and there is no way it will accept the idea of other oil companies taking a stake here," they said.

MBPL was originally planned as a three way joint venture of HPCL, MRPL and Petronet India with stakes of 26 per cent each. The two oil companies decided to pare this to 13 per cent and this is when IOC expressed its interest in picking up a 26 per cent stake. Following this, RPL indicated that it was also participating in the equity of the pipeline to the extent of 10 per cent.

Sources say HPCL is categoric that it is averse to the idea of IOC being the largest shareholder in the project as also any attempt by RPL to take a stake. The thinking in the organisation is that the most logical thing to do is to revert to the original level of 26 per cent along with MRPL. By doing so, only 22 per cent of the balance equity in MBPL needs to be accounted for which will be offered to financial and strategic investors.

The RPL offer took observers by surprise as the company is in the process of evacuating the products of its 27 million tonne refinery through the Vadinar-Kandla pipeline and thereon via the Kandla-Bhatinda network. RPL, along with IOC and Petronet, also plans to build the mega Rs 4,400-crore Central India pipeline (CIPL) from its Jamnagar facility to Gwalior.

HPCL and MRPL pruned their stakes going by a theory that the combined holding by oil companies in a Petronet subsidiary should be confined to 26 per cent. "Technically, there is no reason why several oil companies should not share the equity of a pipeline so long as the PSU component is restricted to 50 per cent," experts say. IOC has, incidentally, made it clear that its participation in the project would depend on a clear definition of its role vis-a-vis HPCL as well as a board representation in the joint venture. This will hold good for RPL also.

Experts say that it makes enormous sense for these two companies to be equity holders in MBPL as the pipeline will ease traffic on the Kandla-Bhatinda network.