Industry sources said that Icra would also evaluate Oil India's role in the overall downstream sector. It may be recalled that a panel was formed by the government more than a year ago to examine the option of a merger between Oil India and Bongaigaon Refinery and Petrochemicals (BRPL). The findings apparently indicated that this was not a "workable alliance."

Oil India has been tipped to take a 12 per cent stake in the Rs 2,600-crore Numaligarh project where the main promoters are Bharat Petroleum Corporation with a 32 per cent stake, IBP (19 per cent) and the government of Assam with 10 per cent. The balance is proposed to be offered to Oil India, financial institutions and the public.

The proposal was, in fact, mooted more than two years ago, and at that time even the Oil and Natural GasCorporation (ONGC) was believed to have been approached for participating in the equity of the project. ONGC, however, declined as it wanted to confine its interests in refining to the six- million-tonne Bina refinery, promoted by BPCL and the Oman Oil Company and scheduled to be commissioned in 2002.

This left only Oil India, except that the PSU has still been indecisive on the issue of entering the downstream sector. At one point, the top brass felt that it was not exactly a good idea to take a stake in a three-million- tonne refinery. They were of the view that in an era of MDPM (market-determined pricing mechanism), a refinery needed to have a capacity of at least six million tonnes to be able to survive.

This, however, was of little concern at that time since availability of funds has never been a constraint for the project. IBP is close to subscribing to its entire 19 per cent stake and in the case of BPCL, the corporation has enough money to even raise its stake further from the current 32 per centif the need arises.

However, now with a Rs 350-crore public issue planned to fill in the balance 39 per cent of the equity, sources say that Oil India's stake could play a crucial role. Market sentiment continues to be weak and if the public issue is pruned by around Rs 100 crore (once OIL subscribes to the equity), the going would be a lot smoother. The Oil Industry Development Board (OIDB) is another alternative for raising funds and this should really not be a problem given the government's concern for projects in the north-east.

The public issue is being made at par and that should be good reason to entice investors. But even this seems a relatively tall order thanks to the market conditions, and sources say it can be scheduled depending on what the budget has in store.

Products of the Numaligarh refinery are being proposed to be transported either to Bangladesh or Burma though this again would hinge on the political situation in both countries. Talks have been held for several months now but so farno concrete solution has emerged.