Sources said the board of Petronet-VK would be supplemented with nominees from the two private refining companies in Gujarat after they subscribe to the equity of the company. According to them, the pipeline project construction will begin in the next few months as substantial progress has already been made in seeking clearances and placing orders for equipment.

Petronet-VK Ltd will cater to the construction of the Vadinar-Kandla pipeline scheduled for commissioning in October next year. Both Petronet India and Indian Oil will hold 26 per cent apiece in the project, with the private refiningcompanies due to pick up 13 per cent each. The cost of the pipeline is estimated at Rs 400 crore. The figure includes the expenditure to be incurred on survey and field engineering, land acquisition, crop compensation, mainline pipes and material and telecommunication. Phasing of capital cost is based on a construction schedule of 24 months for the project beginning October 1997. Various activities of the pipeline project design and execution have been considered while phasing capital cost. It is estimated that 32 per cent of the funds will be needed in the first 12 months of the construction and the rest in the second year.

Based on a 3:1 debt-equity ratio, the equity required will be Rs 100 crore and the debt Rs 300 crore. Petronet India and Indian Oil will contribute Rs 26 crore each while the two refining companies would chip in with Rs 13 crore apiece. The balance equity will be offered to other strategic and financial investors. The Vadinar-Kandla pipeline will be used to transport 11.5 million tonnesof petroleum products over a distance of 115 kilometres. It will act as an input pipeline to IOC's Kandla-Bhatinda pipeline, whose achievable capacity is 11.5 million tonnes.

The pipeline will originate at Essar Oil's refinery, where piping facilities will be provided. The line will traverse for about 17 km from there to reach the main tank farm of Reliance Petroleum's refinery, where the main pipeline pumping station will be provided. From the main tank farm, the pipeline will be laid on pedestals and trestles till 8 km and as sub-sea across Reliance Petroleum's shipping channel for 4 km. The pipeline will traverse sub-sea thereafter to come out on the other bank of the Gulf of Kutch near Luni. From Luni to Kandla, the pipeline will be on land.

Sources say Larsen & Toubro is also keen on picking up a stake in the pipeline. However, Petronet India has reiterated that this will not translate into L&T being awarded the contract for constructing the pipeline. Whether this condition is acceptable to L&Tremains to be seen.

Petronet CCK maiden board meet

Petronet CCK, the joint venture company with Bharat Petroleum, held its first board meeting in Mumbai on Saturday. The company will construct a 308km pipeline costing Rs 553 crore from Kochi to Karur in Tamil Nadu. The first board of directors are Ashok Sinha, KS Manikashetti, L Chhabra and BS Sant. While the two partners will hold 26 per cent each in the project, Cochin Refineries will pick up 23 per cent.