Sources disclosed that HPCL had planned an investment of around Rs 950 crore for implementation of various schemes during 2003-04. All these investments will now be put on the backburner till the process of disinvestment is completed in HPCL, company sources said.
HPCL has planned an investment of Rs 1,152 crore towards modernisation and revamping of existing facilities at its Mumbai refinery. During 2003-04, HPCL had planned an expenditure of Rs 100 crore on its Mumbai refinery modernisation project and around Rs 200 for production of Euro-III compliant fuels at its refinery at Vizag.
Other investments planned by HPCL during 2003-04 include about Rs 70 crore for its various marketing-related activities and another Rs 65 crore for putting up LPG bottling plants as also a marketing terminal at Hassan. All these investment plans will now have to be re-worked, a senior company official said.
On the JV projects on HPCL, sources said the company was planning to spend around Rs 300 crore on its Bhatinda refinery project during 2003-04. Another Rs 50 crore was earmarked by HPCL for undertaking exploratory activities through its joint venture company-Prize Petroleum, set up as a joint venture with ICICI and HDFC. Discussions are in advanced stage to acquire 25 per cent interest in Bakrol oil field in India, sources said.
Another Rs 31 crore have been planned by HPCL in its South Asia LPG company, a joint venture company for construction of underground LPG cavern storage capacities of 60,000 million tonne.
Experience shows that the government normally tells the companies undergoing privatisation to put on hold major investments to give a free hand to incoming strategic investor to decide on how best to steer investments and growth. In the case of Indian Petrochemicals Corporation Limited (IPCL) that was privatised last year, the company did not undertake any fresh investment even on expansion of existing projects for over three years.
Similarly, in case of Shipping Corporation of India (SCI), where the government has decided to call for price bids, its investment plans for purchase of very large crude carriers (VLCC) have been hanging fire for nearly an year. VLCCs are important for SCIs oil business as oil companies have now decided to import crude oil mainly on these vessels.
Even in the case of Hindustan Organic Chemicals for which the government this month invited fresh bids for purchase of controlling stake, the company has kept on hold investments in joint venture with Chematur of Sweden for manufacture of methyl di-isocynate (MDI) for over three years.
In the case of IPCLs 50:50 equal partnership joint venture with General Electric Plastic, the latter bought out IPCL stake on the ground that the management of privatised IPCL might not strike the right chord with it. The government agreed to let GE buy IPCL stake in joint venture named GE Plastics India Limited before priviatisation.