NCLT approves Haldia Petrochemicals scheme to revive Nagarjuna Oil Corp

Haldia Petro is planning to invest around Rs 50,000 cr to convert this refinery into a petrochemical complex

The National Company Law Tribunal (NCLT), Chennai has given its nod for Haldia Petrochemicals (Haldia Petro) scheme, submitted through the Liquidator V Mahesh, for the revival of Nagarjuna Oil Corporation Limited (NOCL).

While the full order copy was not released yet, the liquidator V Mahesh has confirmed the development. However, he didn't share the other details stating that detailed order is still awaited. The copy will have Haldia's proposal, including the haircut which lenders will take.

Haldia Petro is planning to invest around Rs 50,000 crore to convert this refinery into a petrochemical complex.

Haldia Petro was among the three prospective bidders, the other two are Accord Distillers and Brewers P Limited and Adani Ports and Special Economic Zone Limited. However, Accord Distillers & Brewers P. Ltd., in September 2019 withdrew from the bidding process.

NOCL had earlier failed to get a successful resolution plan in the Corporate Insolvency Resolution Process (CIRP) and in December 2018, the National Company Law Tribunal (NCLT), Chennai, ordered liquidation of the company, which is an associate of Nagarjuna Oil Refinery Ltd (NORL). As of October 2020, company's dues, including interests, was over Rs 9,800 crore.

The Liquidator called for EoI and to finalise a scheme submitted by any interested company, after considering various aspects. IBC's Liquidation Sections provide for a revival through a competitive bidding process on "as is where is" basis. Considering that the project could still go on if properly funded and managed, there is one more opportunity for the revival of the company through a scheme that has to be selected by the Liquidator.

Haldia Petrochemicals Limited, Accord Distillers and Brewers P Limited and Adani Ports and Special Economic Zone Limited had submitted Expressions of Interest (EOI). Accord Distillers withdrew its EOI.

Out of the two prospective bidders, Haldia Petrochemicals Limited submitted a scheme in October 2019. The Liquidator had sought approval for the scheme submitted by Haldia Petrochemicals Limited (Final amended Scheme after due negotiations was submitted by the bidder on February 20, 2020) from the National Company Law Tribunal, Chennai. In October 2020, the Liquidator had also filed a company petition seeking approval for the Scheme of Compromise or Arrangement proposed between the Secured Financial Creditors of NOCL - CUL and Haldia Petrochemicals Limited (Scheme Proponent).

NOCL, a joint venture of Hyderabad’s Nagarjuna Fertilizers & Chemicals Ltd (NFCL) and TIDCO of Tamil Nadu Government, is a 6 million metric tonnes per annum (MMTPA) petroleum and oil refinery project in Cuddalore, almost 200 kilometers south of Chennai, which is stalled due to shortage of funds. The facility is spread over in 2185 acre of land.

NOCL's refinery project in Cuddalore was supposed to go on stream in 2012, but was hit by number of delays including a cyclone in 2011. Time and cost overruns resulted in the project cost escalating to Rs 15,000 crore from  Rs 3,500 crore. A consortium of 17 banks, which funded the project, was to have brought in an additional Rs 7,000 crore debt as part of a restructuring which did not materialise and insolvency proceedings was initiated against NOCL.