New Delhi, August 12:Numaligarh Refinery Ltd (NRL) will go on a fund raising spree by the end of the year. So far the refinery, being jointly promoted by Bharat Petroleum Corporation Ltd (BPCL), IBP Company Ltd (IBP) and the Assam government, was being funded out of the promoters' share of equity and Oil Industry Development Board (OIDB) loans.

The promoters plan to begin both a debt and equity raising exercise by to be able to meet the December 1998 deadline for completion of the three-million-tonne-capacity project.

According to sources, talks were already on with prospective merchant bankers, who may be selected to manage the debt instruments and the equity issue. The project has already overshot the cost estimates twice and is now expected to cost Rs 2750 crore. Incorporated in April 1993, the Numaligarh refinery was initially expected to cost Rs 1,830 crore.

The cost was revised early this year to Rs 2,497 crore at a debt to equity ratio of 2:1. Sources say the refinery would cost Rs 2,750 crore adding that funding the project was not a problem.

The two oil companies and the Assam government are contributing Rs 800 crore as equity to the project in proportion of their shareholding. Bharat Petroleum owns 32 per cent of Numaligarh Refinery. IBP Company's stake in the venture, which will be its first captive source of petroleum products since it lost it Burma refineries in the forties, will be 19 per cent.

The Assam government will hold 10 per cent stake. The remaining 39 per cent of the equity will be offered to the public. The promoters are yet to decide where to float the shares at home or abroad, but some insiders feel that it would probably be a domestic issue.

The paid up equity of the company was Rs 207 crore till December last year, out of an authorised share capital of Rs 1,000 crore. The rest is being funded from term loans from the OIDB. The OIDB has so far granted loans of Rs 377 crore to Numaligarh Refinery.

According to the Union petroleum ministry's annual report, the funds were sanctioned on a priority basis following the announcement of a special economic package for the North-east by the then Prime Minister H D Deve Gowda.

The assurance for that package has since been reiterated by Prime Minister Inder Gujral.

Till January this year, Numaligarh Refinery had received Rs 148 crore of OIDB funds. Sources associated with the project hinted that a fresh application before OIDB may be necessary.

The promoters, however prefer not to lean too hard on the ministry regulated development funds. One of the three key promoters said OIDB support is necessary and it is giving money as and when required adding that there is no loan problem either.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.