The trio of BPCL, HPCL and IOC would like to take over IBP as it would supplement their retail endeavours in a fiercely competitive environment. RPL would also benefit as there would be a strong marketing base for the products of its 27 million tonne refinery in Jamnagar. IBP has 1,500-and-odd product outlets all over the country of which nearly 50 per cent are located in the north. This is an attractive proposition as this region is among the largest consumers of petro-products.

IOC and HPCL have already intimated the petroleum ministry of their interest in acquiring IBP. BPCL will make a formal bid once it is officially known next week that the Centre is keen on a privatisation schedule. Should this be through a process of open bidding, it is quite probable that global giants like Shell and TotalFinaElf will also throw their hats into the ring.

Both companies have made it known that they are keen on entering the profitable area of marketing petro-products at the earliest opportunity and IBP would be the best starting point.

Likewise, Mangalore Refinery and Petrochemicals (MRPL), the joint venture of the AV Birla group of companies and HPCL, would logically be in the fray for IBP except that its present financial status is the biggest deterrent.

It also remains to be seen if HPCL will be in a position to bid for IBP as reports doing the rounds suggest that the government may reduce its stake in the navratna to 26 per cent from the present 51 per cent. If that were to happen, HPCL will find itself under the glare of a takeover from players like TotalFinaElf and RPL. On offer will be an extensive retail network of over 4,000 retail outlets and refining capacity of 10 million tonnes.

The government presently holds 59 per cent in IBP but this will come down considerably once the OIDB (Oil Industry Development Board) converts part of its loan component of over Rs 600 crore into equity. OIDB will then become the largest shareholder in IBP with a stake of around 55 per cent with the balance taken up by the government, public and financial institutions.

To elaborate, IBP's paid up capital is Rs 22 crore and should the OIDB convert Rs 250 crore of its loan component into equity, it will be the largest shareholder with a share of over 50 per cent. Interestingly, contrary to common perception, OIDB is a statutory body and not an arm of the government. It has the status of any financial institution like the IDBI or ICICI. An OIDB stake in IBP would not, therefore, translate as a quasi-government holding.

For the last two years, IBP has been going through hard times with the Centre busy trying to find a solution to the problem of stand-alone refining and marketing companies. This delay has compelled IBP to put off its public issue which would have reduced government holding in the company from 59 per cent to 51 per cent. IBP subsequently sought shareholder approval to go in for a Rs 382 crore rights issue which would have logically given the Centre an exit option. This again had to be put on hold because talks began doing the rounds that the company would be merged with BPCL as part of the Sengupta committee's recommendations.

IBP protested and said the best bet was to go in for a strategic alliance with the three sole refiners - Bongaigaon Refinery and Petrochemicals, Chennai Petroleum Corporation and Kochi Refineries - but this suggestion was turned down by the petroleum ministry.