The Hindu : CCEA clears equity hike in Bina refinery

Online edition of India's National Newspaper
Thursday, May 01, 2003

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Business

CCEA clears equity hike in Bina refinery

By Our Special Correspondent

NEW DELHI APRIL 30. The Cabinet Committee on Economic Affairs (CCEA) has approved a hike in equity stake of Bharat Petroleum Corporation Limited (BPCL) in the six million tonne Bina refinery project from 26 to 50 per cent. The Rs. 6,354 crore project will now have only 2 per cent shareholding of the Oman Oil Company while the balance will be raised from financial institutions and the public.

According to an official spokesperson, the CCEA has allowed BPCL to raise its equity contribution in Bharat Oman Refinery Ltd. from Rs. 549 crores to Rs. 1,271 crores, which is equal to 50 per cent of revised equity requirement for executing the project. Till now only Rs.150 crores has been spent on the project promoted by BPCL where the Government is now in the process of divesting 34 per cent of its stake through overseas and domestic public offering. The cost of the project has risen owing to the delay in commencing implementation as it was originally to be set up at an estimated cost of Rs. 5,277 crores but this has now been updated to Rs. 6,354 crores with a foreign exchange component of Rs. 2,025 crores at September 2002 prices.

The spokesperson said the project was to be mechanically completed in 42 months. It was initially conceived as a joint venture between BPCL and the Oman Oil Company. Both BPCL and the OOC were to hold 26 per cent equity. The OOC, however, decided later to limit its stake to Rs. 75.5 crores. One of the reasons for the delay has been concerns of country having excess refining capacity. The project facilities comprise a single-point mooring, a crude oil terminal with connecting sub-sea and onshore pipeline at Vadinar in the Gulf of Kutch, including a 935 kilometre cross-country crude oil pipeline from Vadinar to Bina, and a six million tonne refinery at Bina in Madhya Pradesh for the production of fuels and lube base stock.

The spokesperson said the Bina refinery would bridge the demand-supply gap of petroleum products during the Tenth Plan and facilitate optimal utilisation of BPCL's marketing infrastructure and distribution network throughout the country.

The CCEA also cleared the proposal of the Shipping Corporation of India (SCI) to acquire two very large crude carriers (VLCCs) of 3 lakh dwt for $65.20 million each.

The SCI, which is on the verge of being privatised has seen its share in crude oil transportation business decline to 26 per cent during 2001-02 from 99 per cent in 1989-90. The number of oil tankers available with SCI has also decreased from 34 at the beginning of Seventh Plan to 29 at present.

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