Overseas oil firms to buy Bina stake

Oil companies from West Asia and the domestic public sector oil companies such as Indian Oil Corporation (IOC) and Hindustan Petroleum Corporation (HPCL) are likely to pick up an equity stake in the Central India Refinery Project coming up at Bina in Madhya Pradesh. The project is being set up by Bharat Oman Refineries (BORL), a joint venture between Oman Oil Company (OOCL) and Bharat Petroleum Corporation (BPCL).

"According to an earlier commitment, OOCL can pick up equity in the range of 3 to 26 per cent. It is doing a due diligence of the project. If OOCL decides not go beyond 10 per cent, which translates into Rs 400 crore, we will have to give some share of equity to other oil companies," said R P Singh, managing director, BORL.

OOCL is expected to limit its equity participation in the project to the current level of Rs 75.5 crore, said BPCL sources.

The Rs 10,365 crore brownfield project to set up a 6 mega metric tonne per annum (MMTPA) capacity refinery, has a debt component of Rs 6,378 crore, which is funded by a consortium of bankers led by the State Bank of India. Both BPCL and OOCL had initially contributed Rs 75.5 crore each towards the equity of the company. BPCL has agreed to enhance its equity to 50 per cent, amounting to Rs 1,996 crore. There are also plans are to raise Rs 1,000 crore from the market to fund the refinery.

According to Ashok Sinha, chairman and managing director, BPCL, the physical progress of the Bina refinery has reached 26 per cent and the commitment level has crossed Rs 7000 crore. The project is scheduled for completion by December 2009. BPCL has also signed the product offtake agreement with BORL.

A 265 km long cross pipeline will be built by BPCL connecting Bina and Kota in Rajastan to transport MS, kerosene oil, high speed diesel and aviation fuel. The Rs 405 crore pipeline will have an initial thoroughput of 2.8 MMTPA.

It will originate from the Bina despatch terminal and end at Kora, where it will be connected to the Mumbai-Manmad-Manglya-Piyala pipeline. BPCL will also construct a Rs 400 crore despatch terminal, adjacent to the refinery complex, at a cost of Rs 406 crore.

The refinery will be connected from Vadinar by a 935 km long pipeline to bring in crude oil. The refinery will produce 47 per cent diesel and 14 per cent petrol, 8 per cent aviation fuel, naphta, kerosene and LPG.

The production will conform to Euro IV enviornmental norms, and the refinery will contribute almost half of BPCL's Euro IV conforming products.