Caltex Oil Corporation has firmed up a joint venture with the Chennai-based Southern Petrochemical Industries Corporation (Spic) for a Rs 250-crore refrigerated liquefied petroleum gas (LPG) project at Tuticorin in Tamil Nadu.
The American major had earlier severed ties with public sector IBP Ltd.
Spic had hived-off its petroleum division into a separate company christened `Spic Jothi Gas Private Ltd'. The new company will become a joint venture company with Caltex Oil Corporation.
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The tie up has been made to overcome challenges of a market-driven business and to strengthen operations in the LPG segment. Caltex, being among the successful and older business corporations in the petroleum sector, will be able to lend its strength and competitive edge to Spic.
Spic's petroleum division had achieved a sales volume of 24,960 mt of LPG in cylinders and 21,780 mt of LPG in bulk in 1997-98. Its sales turnover was at Rs 63.49 crore compared with Rs 48.21 crore in 1996-97.
After its split with IBP, Caltex is going ahead with its plans to establish a LPG import terminal at Haldia. The project cost has been downsized by Rs 35 crore to Rs 140 crore.
The slashing of the project cost is mainly due to the fact that the US firm will be going in for a pressurised LPG-bottling terminal instead of the refrigerated terminal as originally planned.
"This change in the nature of the terminal explains the downsizing of the project cost", says a senior state government official.
The terminal project was part of the joint venture with IBP.
As Caltex has taken over the joint venture company, this will mean a 100 per cent direct investment of Rs 140 crore into West Bengal.
IBP and Caltex Oil Corporation, who had a joint venture operating since 1993, broke up in June this year, having mutually agreed to discontinue with the joint venture in its present form.
The main reasons attributed to the break up is the presence of too many players in the field, a Rs 35-crore cumulative loss and the different styles of functioning of the two companies.