Bharat Petro To Pick Up 26% In Tn Cracker

Bharat Petroleum Corp Ltd (BPCL) will hold a 26 per cent equity stake in a new joint venture to implement the proposed Rs 6,500-crore naphtha cracker project in Krishnapatnam (Tamil Nadu). The company will offer another 26 per cent to a local or foreign partner through an open tender, while the remaining equity is proposed to be held by financial institutions and the public.

The cracker is slated to produce over five lakh tonnes of ethylene, apart from several downstream products like polypropylene, polyethylene, styrene and butadiene.

Top BPCL sources said they would shortly initiate talks with leading domestic and global petrochemical companies to rope them in for the project. We want to join hands with global players who have expertise and experience, they said.

 

The companies that BPCL plans to approach for talks include US majors like Amoco Petroleum Corporation and Mobil Corporation, Anglo-Dutch oil giant Royal Dutch Shell and domestic majors like Reliance Industries and Indian Petrochem-icals Corporation Ltd (IPCL).

The naphtha cracker project is part of the company's plan to move into related high-growth areas while focusing on its main business of petroleum refining. BPCL is the country's third largest refiner and posted a net turnover of Rs 10,553.6 crore in 1996-97. The company has earmarked a sum of Rs 1,000 for investment in various petrochemical joint ventures during the ninth plan (1997-2002).

Apart from the naphtha cracker, BPCL is also examining three other projects: a Rs 2,552-crore paraxylene project with Oil and Natural Gas Corporation (ONGC) at Hazira (Gujarat); a phenol venture with Hindustan Organic Chemicals Ltd (HOCL); and a petrochemical venture in Punjab with the Punjab State Industrial Development Corporation (PSIDC).

The implementation schedule of the Tamil Nadu cracker project is not yet clear as the proposal has not been submitted to the Public Investment Board (PIB) for clearance. BPCL officials say work will probably begin by 2000-2001 while the plant should be ready by 2003-2004.

BPCL officials are currently working on a feasibility report which will be submitted to the Public Investment Board (PIB) for stage one clearance. Thereafter, a draft feasibility report containing further details will be prepared for stage two clearance.

BPCL will need to inject at least Rs 750 crore as equity for the project. The money will be needed around the year 2000, when the project will near the implementation stage. Although BPCL has arrears of over Rs 1,000 crore from the oil pool account, it is still one of the cash-rich PSUs. The company is projected to have cash flows of roughly Rs 700 crore in 1997-98.

Among the three refiners, only BPCL and Indian Oil Corporation (IOC) have diversified into petrochemicals. Indian Oil Corporation has identified several petrochemical projects near some of its existing and upcoming refineries in Punjab and Gujarat, and plans to make fibre intermediates like paraxylene and PTA.

On the other hand, Hindustan Petroleum Corporation Ltd (HPCL) has identified power projects in Andhra Pradesh and Punjab.