(NFCL), holds 51 per cent equity in the 6.5 million tonne project while the TIDCO has an 11 per cent share in it. The group intends offloading the remaining 38 per cent to either one or more oil major keeping an eye on synergies and marketing clout of the potential strategic investor, senior group officials told The Financial Express without naming the companies involved in the negotiations.

However, the final equity pattern is still under negotiation and there could be a change in structure, they said without ruling out the possibility of either of the two existing promoters diluting their own holding.

As a consequence the financial closure for the project, being executed on a 2:1 debt-equity ratio is also likely to be synchronised with the finalisationof the equity partner within a month or two, the sources maintained.

While the German multilateral funding agency KFW has reportedly sanctioned loans worth Rs 615 crore the domestic portion of the debt has been tied up with a consortium of financial institutions led by the IDBI. Nagarjuna is relocating a second-hand plant imported from Mobil Woerth in West Germany at a cost of Rs 675 crore and the project is scheduled for commissioning by the last quarter of 2001, the officials said. The dismantling work has been completed 70 per cent and the first shipment of the equipment has begun which is perhaps one reason why there has been an overwhelming interest in picking up equity in the project by foreign oil majors, the Nagarjuna sources said.

Considering the group is importing a second hand plant resulting in an approximate saving of Rs 400 crore to the project and the fact that Nagarjuna has already spent Rs 340 crore from its share of equity, the project is attractive for potential investors, theymaintained.

While it has tied up with Caltex for lifting ten per cent of its product for the export markets, with the option of extending the relationship to the local markets post APM, the multinational oil company is understood to be one of the majors, Nagarjuna has spoken to for offloading the equity.

"However, we would not be averse to roping in a domestic company which has a strong market too", the Nagarjuna sources said.

NOCL intends to market its products in the deficit areas of south India particularly and is basing its calculations on the possibility of the administered price mechanism for the oil sector being dismantled by April 1, 2002.