This component was originally planned as a public issue aggregating Rs 250 crore but the move has not been found feasible due to poor market sentiment. Once OIDB picks up the equity, it would consider offloading it to other investors at a later date, sources said.

BPCL and IBP hold stakes of 32 per cent and 19 per cent each in the refinery with the Assam government accounting for ten per cent. The board of Oil India has given in-principle approval to take a ten per cent stake and this is now pending cabinet approval. The balance, planned as a public issue, is now proposed to be privately placed with OIDB.

"This move makes enormous sense as OIDB has already lent over Rs 1,000 crore to the project. The board has also reduced the lending rate from 14 per cent to 10 per cent which will result in savings of nearly Rs 50 crore for the refinery," sources said. The three million tonne project is now ready for full-fledged commissioning and talks are on with the Bangladesh government to buy half the output.

IBP is, incidentally, exploring the option of selling its own stake in the refinery valued at Rs 175 crore to OIDB. The stand-alone oil marketing PSU has, otherwise, outlined other options to the petroleum ministry which include conversion of the OIDB loan into equity and waiver of the interest on the money borrowed for its stake in the refinery.

IBP has just not been able to mop up funds as its Rs 45 crore public issue has been put on hold for over two years now. The company had also sought ministry approval for a Rs 382 crore rights issue which again seems improbable. Barring dues from the Oil Coordination Committee which run into barely Rs 200 crore, IBP is in dire need of funds for various other activities.

"It is not as if it is the end of the world for the company. But it makes more sense to have a healthy balance sheet to be able to execute some vital programmes," sources said. According to them, a large part of the problem will be solved if the government acts quickly on the Nitish Sengupta committee proposals which had, among other things, suggested sale of 33 per cent of the Centre's equity in IBP to BPCL.

The petroleum ministry is apparently of the view that there is no way it will allow IBP to sell its stake in the Numaligarh refinery. A section of industry, on the other hand, believes that the PSU has nothing to gain with a 19 per cent stake in a refinery which is located in the northeast. They argue that the capacity of the project at three million tonnes is also a good reason to withdraw.