Date:09/11/2004 URL: http://www.thehindubusinessline.com/2004/11/09/stories/2004110902660300.htm

Back Petronet India to be sold by March

Our Bureau

Mumbai , Nov. 8

PETRONET India Ltd (PIL), the consortium of oil companies and financial institutions set up for laying product pipelines, will be sold by March 2005.

The company's board of directors will meet later this month to discuss the sale process with advisors ICICI Securities, Mr A.M. Uplenchwar, Chairman, PIL, told reporters on Monday.

"I-Sec has been given the mandate to define the sale process and find buyers. We shall look at finishing the sale process by March-end," Mr Uplenchwar said on the sidelines of Automation Tech 2004 organised by the Automation Industry Association.

Hindustan Petroleum and Bharat Petroleum Corporation are said to be among the companies interested in buying PIL, which set up projects such as the Mangalore-Hasan-Bangalore and Kochi-Karur pipelines.

PIL was to build projects on the common carrier principle. However, most of the companies that were to benefit from the projects did not agree on signing take-or-pay agreements with Petronet India.

Under the Petronet model, product pipelines could be set up only after the PIL board approved the project and the promoting company held a minimum 26 per cent equity in the venture. However, with the Government granting companies the freedom to set up own pipeline infrastructure, the need for PIL diminished.

PIL is a holding company in which IOC, HPCL and BPCL jointly hold 50 per cent of the equity stake. Private sector companies Essar Oil Ltd (10 per cent), Reliance Petroleum Ltd (RPL) and other investors hold the balance equity.

Speaking about Indian Oil Corporation's plans to set up a liquefied natural gas terminal at Ennore, Mr Uplenchwar, who is also IOC's Director (Pipelines), said the company was in talks with customers interested in buying natural gas. IOC is also in discussions with the Ennore Port Authorities, he said. British Petroleum, which is a partner, has decided to opt out of the project while Petronas will continue to partner IOC. The company is in talks with Iran for sourcing LNG. IOC will initially buy 1.75 million tonnes of natural gas from Iran; the volumes will later go up to 7.5 million tonnes, he said.