A HEADSTART: (from left) M. B. Lal, Chairman and Managing Director, HPCL, Dinsha Patel, Minister of State, Murli Deora, Union Minister for Petroleum and Natural Gas, and M. S. Srinivasan, Secretary, Petroleum, at a press conference in New Delhi on Tuesday. — PHOTO: SHANKER CHAKRAVARTY

NEW DELHI: In a breakthrough in the oil refining sector, state-owned Hindustan Petroleum Corporation Limited (HPCL) and the Mittal Group of companies owned by L. N. Mittal have joined hands to execute the Rs. 15,700-crore under construction Bhatinda Refinery project in Punjab.

According to the joint venture agreement approved by the HPCL Board, Luxemburg-based Mittal Investments and HPCL would hold a 49 per cent stake each in the project and the remaining two per cent would be allocated to financial institutions with the consent of both the parties. The project would be completed in 48 months and would have capability to process 100 per cent high sulphur and heavy crude, thus ensuring attractive terms.

OIL may join

Terming it a major breakthrough, Petroleum and Natural Gas Minister, Murli Deora said that with the new joint venture in place, the project would now proceed on fast track. It will create a large number of jobs in Punjab and increase industrial activity in the State. "I congratulate HPCL on getting the first Foreign Direct Investment (FDI) of the country in the refining sector,'' he added.

The state-run Oil India Ltd (OIL) may join the project at a later date and may get 10-15 per cent equity stake, leaving HPCL with a lower stake. The nine million tonnes per annum refinery is likely to be commissioned by 2011. All statutory and regulatory approvals including environmental clearance for the project have already been obtained.

An estimated 2,000 acres of land has been acquired for the refinery and a lease agreement has also been signed for 300 acres of land with Adani Port Trust for setting up a crude oil terminal at Mundra. Initially, discussions centred around HPCL-Mittal-OIL holding equal stake in the project and offering the rest through an initial public offering closer to commissioning of the refinery. Now the equity pattern has undergone a change. The IPO may be considered at a later date.

Earlier, HPCL had signed a Memorandum of Understanding (MoU) with France-based TOTAL in March 2005 but not much progress was made in the project. Later, Britain-based BP showed keen interest in the project but this alliance also did not materialise.

Once again HPCL started scouting for a joint venture partner and this was when Mittal Investments showed keen interest in this project and discussions were held that finally led to signing of the successful joint venture agreement.

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