Work at Bina project to start next week

Bharat Petroleum Corporation Ltd will start the construction of the Bina refinery project next week. BPCL claims to have secured Rs 6,000 crore from a consortium of banks for the project.

The company has said its first phase will be completed by 2008-09. Although it has made no statement on financial closure, the principal secretary, department of commerce and industry, OP Rawat, told Business Standard: "Construction will start on May 8-9. The chairman of BPCL, AK Sinha, will visit the site and hold discussions with the state government on the progress of work. A work order of Rs 600 crore has been placed. With this refinery the company will be able to refine 5 million tonnes of crude and supply in the Madhya Pradesh region."

Earlier last month, a top company official said the financial closure would take another month.

"Bina is a much-awaited project for the state and it will boost economic activities in the area. The tenders for the construction work have been floated and financial closure has been done," Rawat said.

However, the company is yet to find a partner for the project to share the equity. The project jointly promoted by BPCL and Oman Oil Ltd with 26% state each had been allocated a land area of 1914 acres in Agasod village of Sagar district near Bina in 1993. But later OOL pulled out of the project due to delay in environment related issues.

The company (BPCL) is learnt to have been in dialogues with for a debt of Rs 6000 crore finance from a consortium of all 14 nationalized banks. "The consortium includes State Bank group, Punjab National Bank and Corporation Bank etc.," a source said.

The firm still has an investment of Rs 76 crore in the project. The company is also reportedly looking Oman Oil's partnership in the project.

"Talks are on the stake of both the company may cross 50%, if OOL participates in it. "The company is also likely to sell 14-15% stake if OOL does not participate," a source told BS.

While Madhya Pradesh government is likely to develop a petro complex near the site since it has the first right to refusal for its by-product naphtha. The project cost has been gone up to Rs 9000 crore from the approved cost of Rs 6,354 crore.

The state government has offered the commercial tax deferment of Rs 285 crore to BPCL for 15 years and has given 2,000 acres land.