Kuwait Petroleum board sees big risk in MRPL

Vol 5, PW 18 (24 Oct 01) Midstream & Downstream

Even as the IBP disinvestment moves at a snail's pace, we are seeing some action in Kuwait Petroleum's plans to buy the A.

V Birla Group's 37.4% stake in the 9m t/y Mangalore Refinery. A source tells us that Kuwait Petroleum's board of directors "reviewed and appraised" the project in September.

What was the decision "Neither a categorical 'yes' nor a clear 'no'," we learn. "In that sense we can say it is a positive decision.

We are certainly interested." But Kuwait Petroleum's board sees "serious weaknesses and significant risks" to any investor in the project because of the high level of debt exposure. "There are a lot of uncertainties as the company is now in a debt restructuring exercise with its lenders." More, Kuwait Petroleum is concerned that lenders might impose conditions, which stifle Mangalore Refinery's growth.

"The question before us was whether we should wait till the debt restructuring exercise was over or should we go ahead and see how these concerns can be alleviated." It seems the board chose the latter. "We decided to go ahead with the dialogue.

We can buy the Birla stake if some of these concerns and uncertainties are alleviated and a reasonable price discussed. We are hopeful that the selling party will come along and agree." What's the status now "Everything depends on the Birla group.

If they want we can come to a quick agreement."