Kakinada project may be moved to ONGC

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New Delhi April 16

Oil and Natural Gas Corporation (ONGC) may seek concessions from the Andhra Pradesh Government for setting up a 15-million tonne refinery at Kakinada involving an investment in the range of Rs 19,000 to Rs 20,000 crore. With the investment cost going up due to the enhanced refinery size from 7.5 mt to 15 mt, the company was considering to take the project on the books of ONGC instead of its subsidiary Mangalore Refinery & Petrochemicals Ltd (MRPL).

Speaking to newspersons at the sidelines of a conference on `India's expanding gas markets', Mr R.S. Sharma, Chairman and Managing Director, ONGC, said, "The refinery, currently promoted by ONGC subsidiary MRPL, is proposed to be taken on the books of ONGC since the balance sheet of MRPL is not strong enough to finance the project because of its debt-equity size."

Under the existing project structure, MRPL will hold 46 per cent stake in Kakinada Refinery and Petrochemicals Ltd (KRPL), a special purpose vehicle (SPV) floated to build the refinery at Kakinada SEZ.

Infrastructure lending firm IL&FS and others are likely to have 51 per cent and APIDC will hold 3 per cent.

Mr Sharma did not rule out the possibility of an initial public offering (IPO) for the project in the next two years, wherein the company may divest its stake in KRPL. "We have not yet firmed up the IPO plans but we will look at it at some point of time," he added.

Taken from Business Line

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