Offers $250 million for 26 per cent stake.

Oman Oil Company has offered to buy a 26 per cent stake in the upcoming refinery at Bina for $250 million (Rs 1,200 crore), reversing an earlier decision not to increase its stake beyond the 2 per cent it currently owns.

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“We want to increase our equity (in the project) to 25-26 per cent. We are in discussions with BPCL,” Oman’s oil minister, Mohammed bin Hamad Al-Rumhy, was quoted as saying by news agencies.

Bina refinery was conceived in 1994 with BPCL and Oman Oil Company holding 26 per cent each, while the remaining 48 per cent was supposed to come from strategic investors and the public.

However, Oman Oil Company did not make any contribution beyond the initial Rs 75 crore, which came to about 2 per cent equity in the revised project estimates. The reluctance of Oman Oil Company forced BPCL to go to the government for permission to raise its stake in the project to up to 50 per cent. Once it got the nod, construction began in 2006.

A senior BPCL official said that there’s status quo on the whole equity issue. “Equity closure for the refinery is pending as the market conditions are not good. We will have to re-look at the situation,” he added. Bharat Oman Refinery had shelved its plan to mop up Rs 2,000 crore from the public in March 2008.

The refinery is slated for commissioning in December 2009. The project is to be funded by Rs 4,000 crore equity and Rs 6,400 crore debt.

The company has tied up the debt portion of the project cost. Besides its share, BPCL has also advanced the equity share of its prospective partner as loan, as tying-up of full equity was important for the financial closure.

A 26 per cent stake at par would entail an investment of Rs 1,040 crore, while the Oman Oil Company offer of $250 million comes to Rs 1,200 crore. It was not immediately clear if the offer was acceptable to BPCL.

Bharat Oman Refinery is setting up a six-million-tonne per annum grassroot refinery at Bina, along with crude supply system consisting of a single-point mooring system crude oil storage terminal at Vadinar in the Jamnagar district of Gujarat and a 935-km long cross-country crude pipeline from Vadinar to Bina.

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