Reliance, Essar to get 10 pc stake in Petronet

Petronet India was constituted earlier this year by the four national oil companies to transport petroleum products across the country. The decision to give stakes to Reliance and Essar comes at a time when the government is reviewing the proposals of these companies for their separate pipeline projects.

Petronet India has also given 10 per cent equity each to three financial institutions – Infrastructure Leasing and Financial Services (ILFS), SBI Caps and ICICI Ltd.

The holding company for pipelines was promoted by Indian Oil Corporation (IOC), HindustanPetroleum (HPCL), Bharat Petroleum (BPCL) and IBP Ltd. While IOC, BPCL and HPCL have 16 per cent equity each in the holding company, IBP has just two per cent equity.

Leading bankers and financial institutions from all over the world, including ABN Amro, Bank of America, Morgan Stanley and State Bank of India, are vying to become financial advisor to Petronet LNG.

Petronet LNG, a holding company promoted by four national oil companies to import liquefied natural gas (LNG), will finalise the financial advisor by the end of this month, Petronet’s chief executive Suresh C Mathur told PTI in an exclusive interview.

More than a dozen bankers and FIs have made five bids in the consortium, Mathur said. "All this process should help us achieve financial closure by the end of the current financial year," he said.

The company will also invite global bids early next month for engineering, procurement and construction (EPC) contract for its two projects – at Dahej in Gujarat and Cochin in Kerala – envisaging aninvestment of about $ 850 million, he said. Petronet’s Dahej project company would import five million tonnes of LNG annually and the construction work for the facilities involve an investment of about $ 500 million.

The project company at Cochin would invest about $ 350 million for the project to import 2.5 million tonnes of LNG per year, he said. He said Gujarat government had evinced interest to pick up five per cent equity of the project company at Dahej and added "we are negotiating."

Indian Oil Corporation (IOC) and Oil and Natural Gas Corporation (ONGC) and Bharat Petroleum (BPCL) and Gas Authority of India (GAIL) are Petronet promoters having 12.5 per cent equity each. Petronet had already tied up gas supply from Rasgas-Mobil consortium for 7.5 million tonnes annually from Qatar.

Meanwhile, the government and national oil companies are chalking out a detailed plan to formulate an integrated national grid of petroleum pipelines to transport crude and refinery products in the country, Pathansaid.

“The deregulation of the country’s petroleum sector would necessitate large scale upgradation of transportation infrastructure and a very detailed plan for a national grid of crude and product pipelines is being worked out by all concerned parties,” Pathan said addressing the Petrotech-99 conference.

Pipelines have great potential in India because of the several cost and operational advantages associated with them as compared to other modes of oil goods transportation, Pathan said. The country already has a well-integrated pipeline set-up in the northwest, he said adding more such infrastructure would be spread to the other parts of the country, especially from the west to northeast, to ensure balanced channelling of crude and products.

The national companies may take stakes in the pipeline projects proposed by the private sector via Petronet India. IOC has already evinced upgradation for the liberalised petroleum sector which would also include improved port facilities in the country, in orderto bring down costs of crude and other petro goods import, Pathan said.