According to Petronet, the rules clearly stipulate that a stand-alone refiner should hold up to 23 per cent in any pipeline commissioned under its banner. It is only the marketing company, be it either IndianOil, Bharat Petroleum Corporation or Hindustan Petroleum Corporation, which will hold 26 per cent along with Petronet. Hence, in the Cochin-Karur pipeline, Kochi Refineries will account for only 23 per cent despute the fact that the project has been designed to evacuate the products of its refinery. BPCL and Petronet India will hold 26 per cent equity each in the pipeline.

Similarly, as regards the Chennai-Tiruchi-Madurai pipeline, IOC, along with Petronet, will hold 26 per cent while Chennai Petroleum Corporation will take up 23 per cent. In the Vadinar-Kandla pipeline, IOC 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. This rule, Petronet argues, should hold good for the Mangalore to Bangalore pipeline (MBPL) where HPCL will take up 26 per cent and there is no way MRPL will be allocated an identical percentage of equity.

The only exception to the 26 per cent rule has been made in the case of RPL for the Central India pipeline. However, the logic here is that that there will be maximum director representation from Petronet India. MRPL has, however, refuted this argument and it now looks as if the debate will continue in the months to come.

MRPL was initially given the option of picking up to 20 per cent in the Rs 650-crore project being executed by Petronet-MHB. HPCL was allocated 26 per cent along with Petronet India while five per cent apiece to the Infrastructure Development Finance Corporation, Bank of Baroda, Life Insurance Corporation and the Calcutta-based Industrial Investment Bank of India. The balance eight per cent was set aside for upstream public sector unit, Oil India.

If MRPL were to settle for the originally proposed 13 per cent, the surplus equity will be given to IDFC, sources say. The financial institution had initially been offered 10 per cent and had, in fact, offered to double its stake in the event of Oil India dropping out of the plan and with MRPL's portion being pegged at 13 per cent.

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.

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 companies. MBPL 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.