Indian Oil Corporation (IOC) and Pennar Refineries Ltd (PRL) are in talks for a marketing and distribution tie up for retailing 25 per cent of the latters production in India. Since IOC has an established distribution network, PRL wants to tap it to sell petroleum products from its proposed Rs 3,120-crore export-oriented crude oil refinery at Cuddalore in Tamilnadu.
PRL, promoted by Nagarjuna Fertilizers and Chemicals and Tamilnadu Industrial Development Corporation, is also advised by the Industrial Development Bank of India (IDBI) to tie-up with US-based Caltex for marketing 35 per cent of its products in the international market, while IOC will have marketing rights for the domestic market.
Sources said for the balance 40 per cent, PRL is talking to public sector units like HPCL, BPCL and IOC to be sold internationally.
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Further, it has also finalised the financing pattern for the 5.81-mmtpa refinery. The project has been appraised by the Industrial Development Bank of India (IDBI).
The project is proposed to be financed by equity share capital of Rs 1,040 crore which includes Rs 780 crore from promoters and private placement and the balance Rs 260 crore by way of public issue. Rupee-term loan will be to the turn of Rs 1,468 crore, while the foreign currency loan equivalent to Rs 612 crore will be raised from multilateral institutions.
The company also plans to avail 50 per cent of the foreign currency loan requirement against guarantee from Indian financial institutions, the balance being on non-recourse basis. The requirement of deferred payment guarantee including interest is estimated at Rs 436 crore.
Sources said IDBI has sanctioned a rupee term loan of Rs 500 crore and deferred payment guarantee equivalent to Rs 214 crore (including interest).
The balance requirement of assistance by way of rupee-term loan of Rs 968 crore and deferred payment guarantee of Rs 222 crore including interest thereon is required to be arranged.
The Industrial Financial Corporation of India (IFCI) has sanctioned Rs 400 crore by way of rupee-term loan.
Sources said in order to contain capital cost and to be competitive in the sector, PRL proposes to relocate refinery equipment from two existing and well maintained refineries in Woerth Germany and Los Angeles.
The company also plans to enter into an agreement with Krupp Uhde Gmbh, Germany, for supply and erection of refurbished refinery equipment at the project site. Krupp will also provide project management services for the entire project.
PRL will also enter into an agreement with Caltex, its group companies and affiliate for project advisory services, crude procurement and marketing arrangement. The project is expected to commence commercial production from October 2001.