Bharat Oman banking on IPO or strategic tie-up

Bharat Oman Refinery Ltd, which is executing the Rs 10,378 crore Bina Refinery project, will come up with a public issue or will tie up with a strategic partner next year for an amount of Rs 2,000 crore.

The 6 million tonne Bina refinery is being set up in Madhya Pradesh at Agasod near Sagar district. The project will be completed by December 2009 and will refine crude to make it Euro-IV grade petrol and diesel.

The BORL is most likely to allow go ahead with its existing partner Oman Oil Company to subscribe Bharat Petroleum's stake in the project.

"We have left both the options open and have attained a financial closure for a term loan of Rs 6400 crore at 8.5% rate for a period of 14 years from a consortium of 14 banks led by State Bank of India. For the rest of the amount of Rs 2000 crore we will come up with an IPO or will tie-up with strategic partner," RP Singh, managing director, BORL, told Business Standard here.

He was in the city to participate in the annual general meeting of the company. BPCL has put in Rs 2000 crore in the project thus the BORL has arranged almost 80% of the finance for the project.

"The size of the IPO can be a maximum of Rs 2000 crore," said Mr Singh. He further said the BORL has placed orders of Rs 600 crore value for the project, including project management consultancy contract of Rs 245 crore for Engineers India Limited, Rs 40 crore for site grading, Rs 10 core for boundary wall construction and Rs 8 crore for hostel construction and a water supply project of Rs 10 crore.

Further orders for crude and vacuum columns, raw water supply and projects construction power system of Rs 100 crore are yet to be placed. "These orders will be placed by mid-August this year," said Mr Singh.

Although the company has obtained loan through domestic route, it can also opt for ECB (external commercial borrowing) route to repay existing loan once the construction picks up the pace.

"Option for ECB is open, we will get better deal once we construct the project to a certain limit," said Mr Singh. After a lapse of 10 years, Bharat Petroleum Corporation Ltd (BPCL) has begun the groundwork for the Refinery.