A section of the promoters apparently believe that it would be "virtually impossible" for Petronet to raise money for its 26 per cent equity which works out to roughly Rs 285 crore. While one option is to raise debt, the other which is being pursued vigorously involves Petronet awarding the pipeline contract to a new IOC-Reliance joint venture either on a BOO (build-own-operate) or BOOT (build-own-operate-transfer) basis.

However, other analysts believe that Petronet will not face any problem raising debt as it has managed to do this rather successfully for its other pipelines.

"IL&FS has been given the task of preparing an acceptable formula which is expected to be ready in the next couple of months. The company has also been chosen for the exercise as it is a shareholder in Petronet India with a ten per cent stake," sources said.

The equity pattern for CIPL involves Petronet, IOC and Reliance holding 26 per cent each while the balance 22 per cent is shared equally between BPCL and Essar Oil. At a debt, equity ratio of 3:1, the 26 per cent trio will need to chip in with Rs 285 crore each while BPCL and Essar Oil's contribution would work out to a little over Rs 120 crore each.

"At a practical level, neither Petronet nor Essar Oil has the capacity presently to raise this quantum of funds. The best bet is to ask IOC and Reliance to execute the pipeline," sources say. This would obviously eliminate BPCL from the picture and there is no reason why the oil PSU should not figure in the funding for the project. BPCL also needs the network to evacuate products from its nine million tonne Bina refinery scheduled to be commissioned by 2004.

The petroleum ministry is believed to be of the view that the present equity pattern for the pipeline should not be altered though a section of oil industry analysts reiterate that this should be confined to IOC and Reliance on basis of their financial muscle and expertise in pipeline management.

CIPL's network will terminate its southern trunk portion at Nagpur and not Hyderabad as originally planned. This is consequent to a communique made by Hindustan Petroleum Corporation that it plans to extend its own product pipeline from Vijayawada to Hyderabad.

HPCL presently has a network from Vizag (where it has a 7.5 million tonne refinery) to Vijayawada. The corporation has, for a long while now, proposed to extend this to Hyderabad which is is dire need of products via pipelines. RPL's original plan for its pipeline involved a bifurcation to the south right up to Hyderabad.

According to sources, the CIPL proposal can still reach the Andhra Pradesh region by stretching it up to Sangareddi which is en route to Hyderabad.

From here, it can be routed further southwards to Chennai where products from RPL's refinery can be supplied. The proposal has still not been finalised but experts say it makes sense as a supply backup is essential in the event of a shortfall in Madras Refineries' facility in Manali.

Interestingly, the converse flow of products can also take place from Chennai to Sangareddi where MRL will act as the principal supply source.

Petronet India, it may be recalled, has planned a pipeline from Chennai to Madurai via Tiruchi intended to transport the output from MRL. Sources say this can now be extended to Tirunelveli and be supplemented with products from the Cuddalore refinery being commissioned in 2002 by Nagarjuna Oil.

The CIPL network will begin from Jamnagar and reach Koyali where a new product storage terminal of IOC's Gujarat refinery is being planned. Rajkot is proposed to be an intermediate delivery point en route.

The products of the Gujarat refinery will be injected into the system at Koyali. The provision of connecting CIPL with IOC's Koyali-Ahmedabad and Koyali-Navagam pipelines at Koyali has also been made for flexibility in the supply source.

From Koyali, the pipeline will extend to Ratlam where it will be bifurcated into two networks. The northern trunk pipeline will go to Kota and terminate at Gwalior while a 180 kilometre branch pipeline is planned from the Ratlam-Kota section. The other network, the southern trunk pipeline, will pass through Itarsi and thereon to Nagpur. Branch pipelines are planned for Indore and Bhopal from the Ratlam-Itarsi section.