KOLKATA (ICIS)--The Indian government plans to revive the $4.00bn (€3.28bn) refinery and petrochemical project in north-western province of Rajasthan by switching ONGC Limited with Hindustan Petroleum Corporation Limited (HPCL) as the lead investor, a government official said on Thursday.
The project has been on the books since 2004, the official from the Ministry of Petroleum added.
The 9m tonne/year refinery and a petrochemical complex in the second phase, linked to Cairns India's oilfields in Barmer Basin in Rajasthan desert will be considered by the HPCL board and a final announcement is expected sometime around the company's shareholders' meeting in September 2012, the official said.
The provincial government of Rajasthan had agreed to provide land for the refinery and it is now up to HPCL to negotiate with the government with request for incentives like a tax holiday and an offer for minority equity participation, the official said.
The Barmer refinery was originally conceived in 2004 by ONGC Limited as a principal promoter, coinciding with oil discovery by Cairns India, now controlled by Anil Agarwal's Vedanta Group.
However, ONGC Limited backed out of the project since the provincial government did not agree to its request for incentives.
The state government in a statement issued last week said that Vedanta Group in a communication to the government had expressed willingness to be minority investor in the refinery and petrochemical project, to kick-start its implementation.
The Rajasthan government is very proactive in implementing the refinery since the province is one of the few which does not have a refinery.
HPCL has agreed to be the principal promoter of the project although ONGC, both government-owned and Rajasthan government will be minority shareholders, the official said.
The proposal for participation of the Vedanta Group was under consideration, he added.
As per tentative shareholding conceived by the Ministry of Petroleum, HPCL would have 51% equity, ONGC 26%, government of Rajasthan 18% and government-owned project consultants, Engineers India Limited (EIL) 5%.
Since HPCL was not keen implementing the project without majority stake, accommodating Vedanta Group in the equity was contentious and currently under review, he said.
In December 2011, the Vedanta Group completed the $8.67bn acquisition of Cairns India that produces 175,000 barrels of crude per day from the deserts of Rajasthan.
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(Originally published July 19, 2012, in Chemical News & Intelligence.)