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Home > Business > PTI > Report

Petronet India may be wound up

April 14, 2003 15:25 IST

Petronet India Ltd, the joint venture of public sector oil companies for laying pipelines, is likely to be wound up as 'it has out-lived its utility,' official sources said.

The step is being contemplated since all oil companies have now been permitted to lay pipelines on the basis of the common carrier principle, sources said.

Another reason for closing down Petronet is its failure to implement important projects like the 1,760-km Central India pipeline and 523-km Chennai-Trichy pipeline.

Petronet India Ltd is the holding company promoted by state-owned Indian Oil Corporation, Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd.

PIL was set up in 1997 to prevent wasteful duplication of pipeline facilities and spread the economies of scale among all the interested companies.

"It is widely felt that this objective has been achieved in the guidelines issued by Petroleum Ministry for laying product pipelines that provide for accommodating all interested parties in any proposed project," sources said.

It has also been made mandatory to allow for a 25 per cent extra capacity that could be used by other companies.

Besides, the proposed downstream petroleum regulatory board has been entrusted with powers to fix tariff and sanction capacity of new pipeline projects, sources added.

Already there has been a move to shelve PIL's prestigious Rs 2,450 crore (Rs 24.50 billion) central India petroleum product pipeline project as the promoters are no longer keen on the project.

The Central India Pipeline was to evacuate petroleum products from refineries in Gujarat to consumption centres in central and north India.

Sources said the IOC was keen to lay a product pipeline from its Koyali refinery in Gujarat to Ratlam in Madhya Pradesh (the route of Central India pipeline) and was willing to team up with Reliance if it built the Jamnagar-Koyali part on its own and share the cost of remaining stretch with IOC.

The Central India Pipeline project was to traverse from Jamnagar to Ratlam via Rajkot and Koyali. From Ratlam one section was to branch to Gwalior and the other section to Nagpur to feed the various consumption zones in the central India, sources said.

Petroleum products - petrol, diesel, kerosene and naphtha - were to be injected in the pipeline at Jamnagar from Reliance's 27 million tonne refinery and Essar's proposed nine million tonne refinery and at Indian Oil's Koyali refinery.

While Reliance Petroleum Ltd, IOC and Petronet India held 26 per cent stake each in the mega pipeline project, Bharat Petroleum Corporation and Essar Oil had 11 per cent apiece.

PIL had also failed to raise resources for the 523-km Chennai-Trichy pipeline as financial institutions insisted on a take-or-pay clause, sources said, adding IOC is now planning to take up this Rs 540 crore (Rs 5.4 billion) project on its own.

© Copyright 2003 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.





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