MNCs keen on picking stake in Paradip refinery

MNCs keen on picking stake in Paradip refinery
PRESS TRUST OF INDIA

JAN 11: Three international energy concerns have evinced interest in picking stake in Indian Oil Corporation's (IOC) Rs 8,312 crore Paradip refinery in Orissa.

"Three international companies have evinced interest in picking stake in the nine million tonnes grassroot refinery which is scheduled to come up by 2004," Indian Oil Corporation (IOC) chairman M A Pathan told reporters here.

Pathan, however, declined to reveal the names of companies with whom IOC had initiated preliminary discussions for a possible equity participation.

Company sources said talks with Kuwait Petroleum Corporation (KPC) for a possible equity participation have resumed.

KPC, which was earlier offered 26 per cent stake in the refinery project, had decided to go slow on investment in grassroot refinery untill their business credentials were established.

When contacted, Kuwait Petroleum Corporation deputy chairman and CEO Nader H Sultan said, "we are keen to enter the downstream refining and marketing sector in India and have been talking to a number of refiners for possible equity participation."

Sultan said his company was keen on participation in refineries which have established credentials. Asked if Kuwait Petroleum would consider an operating refinery over a grassroot refinery he said, "we want to invest in credible and established refinery."

Pathan said IOC would continue operating its seven refineries at about 90-95 per cent of the installed capacity in 2001, mostly unchanged from the previous year.

"I foresee a scenario where refineries would be operating at below their installed capacity," he said adding well-run refineries world-over operate at around 85-90 per cent of the installed capacity.

Operation at 107-110 per cent is not the recommended operating capacity. We are moving from the era of slogging to operating which does not necessarily mean operating at the installed capacity, he said adding refineries are regulated on the basis of marketing needs and not operational efficiencies.

IOC, as the canalising agency for the government, would import more than 70 per cent of the domestic crude requirement on term contract basis.

Government-to-government contracts for crude import are more economical than spot buying and the country was moving towards more of term contracts, Pathan added.