Hindustan Petroleum Corporation, the lead company, has already expressed its intention to hold 26 per cent in the project. According to sources, it does not make sense to have another co-promoter in the form of MRPL given that Petronet India will also subscribe to a 26 per cent stake.

In all, the product pipelines of Petronet, there is only one lead company which has controlling stake while the others can participate to the extent of 23 per cent. Hence, in the Vadinar-Kandla pipeline, Indian Oil and Petronet hold 26 per cent apiece while Essar Oil and Reliance Petroleum (RPL) account for 13 per cent each. The pipeline has been designed to evacuate the products of the two private sector refiners.

Similarly, in the case of the Kochi-Karur network, Bharat Petroleum Corporation and Petronet will hold 26 per cent equity each while Cochin Refineries will take 23 per cent. The same holds good for other Petronet projects except for the Central India pipeline where RPL will hold 26 per cent along with IOC and Petronet. This, however, can be justified by the fact that RPL has set up the 27 million tonne Jamnagar refinery on its own without inducting another partner.

This is not the case with MRPL where HPCL and the AV Birla group of companies are the joint promoters. Essar Oil, likewise, is planning to rope in a strategic partner for its Vadinar refinery. The Petronet board is, therefore, of the view that as regards MBPL, HPCL should be the only other promoter with Petronet India especially when the PSU already has a stake in MRPL.

To make up for any shortfall in the equity structure, Oil India is also being offered a stake in the pipeline. The Infrastructure Development Finance Corporation (IDFC) has already stated that it is ready to pick up equity over its allotted ten per cent.

The other shareholders in the project are Bank of Baroda, Life Insurance Corporation and the Calcutta-based Industrial Investment Bank of India with 5 per cent apiece.

IOC, it may be recalled, had indicated its willingness to take 26 per cent in MBPL. This was the time HPCL and MRPL had pruned their stakes to 13 per cent each from the originally planned 26 per cent apiece. RPL had, consequent to IOC's offer, expressed its interest to pick up a ten per cent stake in MBPL.

The offer took observers by surprise as RPL 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. "It is still difficult to understand why RPL was interested in participating in the equity of MBPL unless it planned to move products from Kandla to Mangalore for further evacuation," experts say. The network has been planned to carry MRPL's output as well as imports from Mangalore port. Had RPL been offered a stake, these could have been done away with by substituting products from its Jamnagar refinery instead.

IOC had, incidentally, made it clear that its participation in the project would depend on a clear definition of its role vis-a-vis HPCL, which is the lead manager, as well as a board representation in the joint venture. This would have applied had RPL got a stake in the project.

HPCL had objected to the probable participation of both IOC and RPL in the equity of MBPL. IOC reiterated that it was merely attempting to help out in sewing up the equity structure though HPCL's point of view was that no other oil company could account for more than its own 13 per cent stake. There was the added problem that IOC (as well as RPL) were competing refining companiesMBPL will be 364 km long and designed for a final throughput of 8.5 million tonnes. However, other facilities like a pumping system and loading facilties are currently designed for a throughput of 5.6 million tonnes. The pipeline will transport motor spirit, superior kerosene oil, high speed diesel, aviation turbine fuel and naphtha from MRPL. It will cater to the consumption zones of Karnataka and Andhra Pradesh.