New Delhi, Jan. 22: Indian Oil Corporation (IOC) is shifting its focus to Iran in view of the failure of the Bengal government to respond to the Rs 5,700-crore package for developing Haldia into a world-class hub for petrochemicals.

Even as lenders hammered out a corporate debt restructuring package for Haldia Petro that brought in Gail as the fourth promoter, a senior IOC official had told The Telegraph that the chances of its package for HPL going through were rather slim.

Gail has agreed to infuse around Rs 350 crore by way of equity in Haldia Petro for a 16 per cent stake. IOC, on the other hand, had made a formal offer to the Bengal government on December 9 that it was willing to invest up to Rs 5,700 crore in various projects connected with HPL if it was given management control of the company. The oil major was willing to infuse even up to Rs 700 crore as equity.

This formal offer had been made after IOC chairman M. S. Ramachandran had discussed the proposal with Bengal industries minister Nirupam Sen in Calcutta. Most senior IOC officials are of the view that Bengal’s loss may turn out to be Iran's gain. Sources said that some of the projects being envisaged for Haldia may now be taken up in Iran.

A team of senior IOC officials will leave for Iran soon to study the feasibility of setting up a giant petrochemicals plant there in collaboration with National Petrochemicals Company (NPC) of Iran. Iran’s abundant supply of natural gas that can be used as a feedstock is a major attraction.

IOC’s plan for HPL, submitted to the Bengal government, envisages a major capacity expansion of the existing plant and the setting up of new units which include a mega sized styrene plant that would the first of its kind in the country. The cash-rich oil major has informed the state that all these projects would be implemented on a war footing if it is given management control of HPL.

IOC’s new investment plans for HPL include a Rs 800 crore for expanding the existing naphtha cracker from 466,000 tonnes capacity to 660,000 tonnes. Another Rs 200-300 crore has been earmarked for enhancing the capacity of the downstream polymer unit.

The styrene unit, which will be set up at a cost of Rs 700 crore, will boost exports from Haldia and provide more traffic to the port as well. The package includes a Rs 500 crore investment for a condensate refinery to produce high grade naphtha for HPL. According to IOC’s plan, feedstock to HPL would be diverted not only from its Haldia refinery but the Barauni, Guwahati and Bongaigaon and Chennai refineries as well.

IOC had earlier offered to invest Rs 468 crore by way of equity participation in HPL provided it gets a 28 per cent stake along with the management control of the company. It had also insisted that all the other partners had a share of less than 26 per cent. However, Purnendu Chatterjee who currently owns a 44 per cent stake in the company had refused to agree to this condition.

Two years have gone by since IOC made its offer and the impression in the oil industry is that Bengal has lost valuable time. Gail (India) Ltd had further queered the pitch for IOC by agreeing to pump in Rs 200 crore without management control and Chatterjee had informed the financial institutions that the company would raise another Rs 268 crore to take the total fund infusion to Rs 468 crore.

However, the financial institutions had stated that they would not restructure the debt unless Rs 600 crore was infused into the company which was proving to be a difficult task for HPL. The Bengal government owns a 44 per cent stake in HPL and the Tatas with around 11 per cent are the other partners in the joint venture.