Oman Oil Company has decided to participate in the Rs 6,562 crore Bina refinery project, but has refused to make any further contribution towards its equity.
OOC which so far has contributed only Rs 75.5 crore for the equity of the project in which it was to have a 26 per cent stake, has said that it would review its decision regarding further investments in the refinery after a year or so, depending upon the progress of the project. The project will have a debt-equity ratio of 1.75.
This was conveyed by Bharat Petroleum Corporation Limited (BPCL) co-promoters of the project _ to minister of state for petroleum and natural gas Santosh Kumar Gangwar while making a presentation on the progress of the refinery here yesterday.
BPCL said its inference from the discussions with the OOC was that the latter was linking the Bina refinery project with the fertiliser project coming up in Oman as a joint venture between Oman and India.
The project was approved by the Cabinet Committee on Economic Affairs (CCEA) in December 1995 at an estimated cost of Rs 5,277 crore ($1,675 million at an exchange rate of Rs 31.50 per dollar). However, the cost estimates which were revised in January 2000, put the cost at Rs 6,562 crore ($1,509 million at Rs 43.50 per dollar).
BPCL pointed out that the project cost in terms of dollars has come down against the detailed feasibility report costs because of the recent trend of reduced loadings in the engineering industry and reduction of raw material costs. However, BPCL was also quick to point out that the refining margins have also come under pressure because of change in prices of crude oil and other petroleum products.
It said an independent consultant, Purvin and Gertz, has made revised profitability estimates of the project using revised capital costs and updated report on projected prices of crude oil and petroleum products. It has given the project a 15.5 per cent internal rate of return.
