The two oil companies had signed this pact way back in mid-1998 which incidentally provides for a review of its continuance in the event of IBP being privatised.

A quote from the agreement: ``It is made clear that if the existing status of any of the parties is undergoing any change - if any of them is not a Government of India undertaking - the other party will be entitled to terminate this agreement forthwith and/or enter into a new agreement with such modified terms as may be agreed between the parties upon happening of such an event. This is without prejudice to each party's rights and obligations against each other for any act of service prior to such termination.''

Sources say that there is really no dire need for BPCL to even consider calling off this arrangement now as it will take quite a while before the disinvestment programme of IBP gets underway. However, should its ownership change hands to another oil company, BPCL may not consider extending this hospitality umbrella unless it is found to be economically viable.

The navratna, incidentally, is tipped to be a serious contender for IBP though the board still has not taken a decision about going ahead. Counterparts IndianOil and HPCL have already indicated that they are keen on acquiring IBP's 1,500-and-odd retail outlets and it now remains to be seen if they will do this independently or team up with other companies either from here or abroad.

The agreement between BPCL and IBP involved the latter availing itself of product assistance, product storage and handling from its stronger ally in the petroleum sector. It envisaged three main areas of activity: a) import of products by BPCL on behalf of IBP; b) purchase of BPCL's product by IBP at refineries, installations, tap-off points and depots and vice-versa; and c) use of BPCL's infrastructure at these facilities by IBP for storage and handling.

The products covered under this pact are motor spirit (MS), high speed diesel (HSD), superior kerosene oil (SKO), naphtha, light diesel oil (LDO), furnace oil (FO) and low sulphur heavy stock (LSHS). The partners agreed that in the event of storing packed lubricants at BPCL locations, IBP would need to enter into a separate agreement. The navratna would extend storage facilities for lubricants to IBP at all locations subject to availability of space.

As per the pact, IBP would directly surrender the surcharge and claim for various under-recoveries allowed as per the oil-pool pricing scheme. If BPCL were to incur any cost on behalf of IBP, which would not be reimbursed from the pool account, a proportionate cost would be borne by IBP in the ratio of product lifted ex-BPCL.

The agreement stipulated that BPCL would train senior personnel of IBP at its locations though this will be subject to availability of space. At the time of drafting the pact, the navratna had planned to instal an advanced network of advanced information technology which would be extended to IBP.

It may be recalled that the Nitish Sengupta committee report had suggested that the government sell 33 per cent of its stake in IBP to BPCL as part of an overall recast plan for the oil sector. At that time, both companies were involved in setting up the three-million-tonne Numaligarh refinery in Assam and it was generally assumed then that this was the beginning of a long-term relationship. This, in turn, prompted the product assistance agreement which could now be terminated.