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Murali Gopalan
Mumbai, Sept 17: Petronet India (PIL), the joint venture pipelines company, is gearing up for an important project from Mangalore to Bangalore. The operating company, Petronet-MHB, promoted by PIL and Hindustan Petroleum Corporation, held its first board meeting recently. While HPCL director SK Kerr will be the chairman, the other directors are SK Kapoor, PIL managing director Luv Chhabra and Roy Choudhary.
The Rs 707-crore project, where PIL and HPCL will contribute to 26 per cent apiece in the equity, is expected to be commissioned by 2001. Mangalore Refinery and Petrochemicals (MRPL) will also be offered a 26 per cent share in the project and will exercise its option shortly.
The 365 km long multi-product pipeline will connect MRPL to Bangalore and will be designed for a final throughput of 8.5 million tonnes. However, all other facilities like a pumping system and loading facilities are currently designed for throughput of 5.6 million tonnes.
The pipeline will transport motor spirit, superiorkerosene oil, high speed diesel, aviation turbine fuel and naphtha. It would cater to the consumption zones of Karnataka and Andhra Pradesh. The project would be configured as a despatch terminal at Mangalore consisting of mainline and booster pumps, pig launchers, sump pump and tank; a tap off terminal-cum-intermediate pumping station, and a receiving terminal at Devengothi.
According to present plans, there will be hard-cut facilities at Hassan so that products are transported simultaneously towards Hassan terminal and Devengothi terminal in Bangalore. The project will be executed by HPCL as project management consultant. Backup assistance of engineering contractor will be taken for providing necessary services in basic design, detailed engineering and procurement.
The Rs 707-crore project cost is based on a construction schedule of 36 months beginning January, 1999. Various activities of the pipeline design and execution have been considered while phasing capital cost. For this project, 4 per cent, 26per cent, 52 per cent and 18 per cent of the funds would be needed in the first, second, third and fourth year of construction.
Based on a 3:1 debt-equity ratio, the equity required would be around Rs 177 crore while the balance Rs 530 crore would account for the debt portion. PIL and HPCL would contribute around Rs 45 crore each while the balance equity is expected to be raised from MRPL and other strategic and financial investors.
The consumption zones to be fed by the pipeline are Hassan, Mysore, Shimoga, Coog, Chickmagalore, Chittradurga, Bangalore, Tumkur, Kolar, Mandya (Karnataka), Guntakal, Ananthapur, Kurnool and Mehboobnagar (Andhra Pradesh).
Petronet India was formed as a financial holding company under a directive of the government of India with the express objective of developing a pipeline infrastructure in the country through its joint venture companies or subsidiaries and providing pipeline access on a common carrier principle.
The equity shareholding of the oil companies - Indian OilCorporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation - has been restricted to 50 per cent and the balance is to be offered to financial companies or companies with the restriction that contribution from an individual entity would not exceed 10 per cent.
Similarly, in the joint venture companies, the holding company (PIL) and operating oil company would hold a minimum of 26 per cent each in the equity while the balance would be offered to financial institutions and the public. PIL and the joint venture companies are to be structured as viable, independent commercial entities, which would be project-financed on a stand-alone basis on the strength of their cash flows.
Various pipeline networks have been identified of which three will be given priority initially. These are the Vadinar-Kandla, Cochin-Karur and Mangalore-Bangalore projects proposed to be constructed individually by Petronet-VK, Petronet-CCK and Petronet-MHB. The pipelines are tentatively proposed to be financed at adebt-equity ratio of 3:1. The debt funding is expected to be largely tied up in the form of rupee term loans from financial institutions and banks.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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