Page 42 - Plastics News April 2018

Business news

IOC, BPCL may buy 26 per cent TN petrochem industry pitches

stake in Gail. for naphtha cracker facility

ndian Oil Corp (IOC) and Bharat Petroleum Corp Ltd etrochemical industry in Tamil Nadu has urged the
I(BPCL) may buy 26% stake each in gas utility GAIL India PCentre and State governments to help establish
Ltd, paying the government over Rs 20,000 crore each a naphtha cracker and downstream units complex as
to become integrated energy firms. According to reports part of the Petroleum, Chemicals and Petrochemical
following finance minister Arun Jaitley’s February 2017 Investment Region policy and industrial cluster
Budget announcement of creating integrated oil majors, development. In a representation to the Centre, the
IOC and BPCL had submitted separate proposals to buy the Chemical Industries Association has urged the Petroleum
government’s 54.89% stake in India’s biggest gas marketing and Natural Gas Ministry to establish a naphtha cracker
and transportation plant that will utilise the excess naphtha available from
f ir m, GA IL. CPCL’s refineries in Chennai and the planned expanded
Experts say since facility in Nagapattinam. According to the association,
the government petrochemical and plastic units are starved of raw
is not looking at materials and are dependent on imports. CPCL’s Chennai
actual merger of refinery will soon generate over 900 KTPA naphtha
oil companies but and with a new refinery complex in Nagapattinam,
only transfer of over 1500 KTPA will be available. The cracker unit
its ownership to a can be established on a collaborative model with
cash rich PSU, the CPCL, the standalone refinery of oil marketing giant
best option would IOC, partnering downstream companies to generate
be to split the 54.89% holding in GAIL equally between IOC over Rs.25,000-crore investment envisaged for the
and BPCL. At Friday’s closing price of Rs 440.85 a share project. Over 1,500 acres land is available near the
for GAIL on BSE, the stake is worth close to Rs 41,000 Nagapattinam refinery within the proposed PCPIR by
crore. In January this year, Oil and Natural Gas Corp the State government. Therefore, there are no issues
(ONGC) bought out government’s 51.11% stake in refiner relating to rehabilitation and resettlement, according
Hindustan Petroleum Corp Ltd (HPCL) for Rs 36,915 crore. to the association. A pre-feasibility study has been
But HPCL hasn’t been merged with ONGC and continues to conducted and the project can be commissioned by
remain a separate listed company with the same board. 2025.Last year, the Tamil Nadu government had notified
After the buyout, HPCL has become a subsidiary of ONGC, over 23,000 ha spanning 45 villages across Cuddalore
which gets up to two seats on the company board. IOC
and BPCL too can follow the same model and split the
government’s stake equally among themselves. GAIL will
become their subsidiary and will continue to operate as
a listed company with an independent board. IOC and
BPCL would get to appoint one director each on GAIL
board. Like in case of ONGC’s acquisition of HPCL, the
government would get to encash its holding in GAIL yet
retain control over the company through IOC and BPCL.
However the government has so far not taken any view and Nagapattinam districts as a PCPIR. The proposal
on the proposals made by IOC and BPCL. Jaitley in the to promote the area as a PCPIR for investments in the
2017-18 Budget had unveiled government’s plan to create sector was approved by the Centre in 2012.Originally,
integrated public sector oil majors “through consolidation, the Hyderabad-based Nagarjuna group’s refinery
mergers and acquisitions” so as that the merged company planned at Cuddalore was to be the mother unit for
has “capacity to bear higher risks, avail economies of the PCPIR. But the project has been stalled and efforts
scale, take higher investment decisions” and is “able to are on to revive the refinery plan under the purview
match the performance of international and domestic of the NCLT.
private companies?.

Plastics News April 2018 42