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Indian Oil back in Bengal fray

New Delhi, Sept. 5: Indian Oil Corporation has bounced back into contention in the Haldia Petrochemicals stakes, which also brightens the prospect of Bengal attracting a Rs 5,700-crore investment by the state-run oil giant.

Indian Oil was shut out of the game when Gas Authority of India Ltd (Gail) found favour with the Bengal government and Purnendu Chatterjee, the private partner in Haldia Petro, though it was investing much less than the oil refiner. Indian Oil had insisted on a controlling interest and Chatterjee was loath to concede this.

Sources say petroleum minister Mani Shankar Aiyar has examined the issue closely and feels Indian Oil has a better case for investing in Haldia than Gail.

They said the petroleum ministry would soon meet the chief secretary of Bengal and the chairmen of Indian Oil, Industrial Development Bank of India and Gail to take the matter forward.

Gail has agreed to infuse around Rs 350 crore in equity in loss-making Haldia Petro for a 15 per cent stake but had not insisted on management control.

Indian Oil had made a formal offer to the Bengal government on December 9 last year that it was willing to invest up to Rs 5,700 crore in various projects connected with Haldia Petro if it was given management control. The oil major was willing to infuse even up to Rs 700 crore in the companyís equity.

Its plan, submitted to the Bengal government, envisages a major capacity expansion of the existing plant and the setting up of new units which include a large styrene plant that will be the first of its kind in the country.

The cash-rich oil refiner had informed the state government that all these projects would be implemented on a war footing if it was given management control.

Indian Oil proposed to spend Rs 800 crore on expanding the naphtha cracker plant from 466,000 tonnes to 660,000 tonnes. Another Rs 200 to 300 crore was earmarked to enhance the capacity of the downstream polymer unit.

The styrene unit, to cost Rs 700 crore, will boost exports from Haldia and provide more traffic to the port. The package includes a Rs 500-crore investment to produce high-grade naphtha for Haldia Petro.

Feedstock to Haldia would be diverted not only from Indian Oilís refinery there but also from Barauni, Guwahati, Bongaigaon and Chennai.

Much earlier, Indian Oil had offered to invest Rs 468 crore by way of equity provided it received a 28 per cent stake along with management control.

It had also insisted that all the other partners should have a share of less than 26 per cent. However, Chatterjee, who currently owns over 48 per cent stake, had refused to agree to this condition. The Bengal government had dithered over the proposal for two years.

The government has 40 per cent of Haldia Petro and the Tatas close to 12 per cent.

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