The Telegraph
Friday , February 15 , 2013
Since 1st March, 1999
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IOC awaits Deloitte tips on HPL

Calcutta, Feb. 14: Indian Oil Corporation will take a decision on buying an additional stake in Haldia Petrochemicals only after Deloitte, a consultant appointed by the Bengal government, comes up with its suggestions.

IOC chairman R.S. Butola feels his company has synergy with HPL given that its own refinery is located close by.

“They (Bengal government) have appointed a consultant, Deloitte, to evaluate and then take a decision. So as of now, there is no decision. So, we will take a call when such a decision is taken,” Butola said on the sidelines of an oil industry conference on safety.

The chairman also referred to the “first right of refusal” that The Chatterjee Group, HPL’s private promoter, claimed to have on WBIDC shares.

However, The West Bengal Industrial Development Corporation (WBIDC), the state government agency owning the HPL stake, has taken a decision to divest its stake, and Deloitte has been appointed as an adviser to the sale transaction.

Sources said IOC was yet to reveal its cards unless Deloitte came up with its suggestions. While it is certain that the WBIDC will exit — there is a decision on it by a group of ministers of the Mamata Banerjee government — there is a lack of clarity on how the process will be run.

For instance, the outcome of the sale process will greatly depend on when the first right of refusal claimed by TCG will kick in.

TCG has argued that shares must be offered at a price following a valuation exercise by a third party. The shares can only be offered to others, such as IOC, if TCG declines to buy.

The Bengal government has argued that the price discovery will be done by a bidding process where everyone can participate.

The shares will then be offered at the highest price to TCG. If it declines, the shares will go to the highest bidder. TCG is opposed to this process as the price discovered by bidding is likely to be higher than if it is done by valuation.

TCG has in the past gone to several courts to establish its rights and a legal dispute cannot be ruled out again.

IOC has an 8.89 per cent stake in HPL, and it is keen on a controlling stake in the company for a decade now to exploit its synergy with the refinery at Haldia.