Bhatinda refinery IPO soon: L N Mittal

“HPCL Mittal Energy Ltd (HMEL) is a good platform to grow (in energy space),” Mittal said here.

But his focus currently is to stabilise production at the 9 million tonnes Bhatinda refinery that was dedicated to the nation by Prime Minister Manmohan Singh yesterday.

Once the refinery,built by HMEL — the equal joint venture of HPCL and Mittal Energy Investment — stabilises and starts making money,he would think of the next steps like doubling the capacity to 18 million tonnes,foraying into oil and gas exploration and investing in raising complexity of the refinery to improve margins.

“I am not ready for my guys to think loud” before the refinery stabilises in a years time,he said adding a low-cost expansion of existing units to raise refining capacity to 11.2 million tonnes would be considered after that.

Mittal had in 2005 teamed up with ONGC for his big energy splash and formed two companies — one for exploration and production of oil and gas,and other for oil trading.

But the joint ventures lost sheen first because ONGC was not interested in trading business and then the 2008 economic downturn forced Mittal to restrict himself to his core business of steel making.

“The partnership (with ONGC) is not over but there are not many projects that the partnership is discussing,” he said.

Mittal,after the inauguration of the refinery,had yesterday stated that listing of HEML was a desirable objective.

“It (IPO) should happen. But the timing is for the company board to decide. I’m not on the board of the company,” he had stated.

HPCL-Mittal Energy Limited (HMEL),a joint venture between state-owned HPCL and Mittal Energy Investment Pte Ltd,Singapore,an L N Mittal Group Company,built the Rs 21,500 crore Guru Govind Singh refinery here.

The two hold a 49 per cent stake each in HMEL,while the remaining 2 per cent is with financial institutions.

Mittal said public listed companies are a more desirable model.

The two promoters may sell 10 per cent stake each in the IPO that may happen not before next year.

Mittal said the Guru Gobind Singh refinery at Bhatinda had land to double unit’s capacity to 18 million tonnes in future.

Also,the 1,017-km cross-country 1,014-km pipeline that transports imported crude oil from Mundra,in Gujarat,to the refinery,has a capacity to carry 18 million tonnes a year of crude.

Mittal said his company was interested in working with HMEL on exploration and production of oil and gas. “With HMEL,we have set the stage.”

Mittal Investment Managing Director Sudhir Maheshwari said the promoters have invested about Rs 8,000 crore as equity in the Rs 21,500 crore Bhatinda refinery project while the remaining has come as debt.

The refinery is configured to meet the demand of north India,which currently has a demand of 40 million tonnes of petroleum products. Against this,supplies for units in north are only 25 million tonnes annually.

Of its total produce,diesel would constitute 40 per cent,while gasoline or petrol would be about 10 per cent. LPG would be 8 per cent and it will not produce any fuel oil.

Though “we are not seeing the progress we would like” in our steel projects,”our committment to India is there as seen from investment in Guru Gobind Singh Refinery,” Mittal said.

The refinery,he said,was a clear signal that if state was set rights,things can happen.

On how he choose Bhatinda refinery to invest,Mittal said when in 2004-05,he decided to partcipate in India’s energy security,there was a lot of discussions on possible opportunities.

The Bhatinda project was one where previous Prime Ministers had laid foundation stones but not much progress had been made,he said,adding HPCL had already acquired land for the project and so he thought it was a good investment to make.