Nagarjuna refinery to tie up funds soon

The six-million tonne refinery at Cuddalore in Tamil Nadu, promoted by the Nagarjuna group and the Tamil Nadu government is expected to complete financial closure by the end of the year.

Company sources said that most of the debt for the Rs 4,750-crore project was already tied up and that the group was in talks with several small foreign oil companies, including Russia's Itera group, for equity placements.

"We are not sure if Itera will take up equity at this point, as we are still talking with them. We are also in talks with several other foreign companies for equity but cannot reveal any names," said a source close to the development.

Tata Sons has already picked up a 26-per cent stake at Rs 400 crore in the project and is expected to hike it to 40 per cent at a later stage, sources said. This will be Tata group's first foray into the down-stream refining sector.

Indian refining major, Indian Oil Corporation (IOC), has also picked up a 10-per cent stake in the project through its subsidiary, Indian Oil Corporation Tankers.

IOC has also signed a memorandum of understanding with Nagarjuna Oil Corporation for marketing its products such as LPG, Euro-IV motor spirit, high-speed diesel, fuel oil petrochemical, naphtha and sulphur.

The Nagarjuna group will have a 51-per cent equity stake in the project, while co-promoter Tamil Nadu Industrial Development Corporation holds 5 per cent. Krupp Uhde, the EPC contractor has a 7 per cent stake in the firm.