Indian Oil wants to split Haldia Petrochemicals

Vol 4, PW 16 (13 Sep 00) People & Policy

Indian Oil Corporation is unlikely to take a stake in the Rs5,170cr ($1.2bn) showcase petrochemical complex in West Bengal, promoted by Haldia Petrochemicals.

On September 3rd, IOC chairman Mohammed Pathan held an hour of talks on the issue with West Bengal's communist chief minister Jyoti Basu in Calcutta. In later discussions with a correspondent for this report, an IOC source said the corporation does not consider the project viable with a 4:1 debt/equity ratio.

By contrast, he said IOC is interested in the projects associated naphtha plant but only if its assets are organised into a separate company. He added that if the equity base ofthe naphtha plant is Rs200cr ($46m), IOC might be willing to pick up a 49% stake with an investment of Rs98cr ($22.8m), and later invest a further Rs80cr ($18.6m) to acquire a majority stake.

It is understood that opposition to the IOC proposal comes from the Chatterjee Group, owned by Purnendu Chatterjee, and one of the principle shareholders in Haldia Petrochemicals. Chatterjee holds 21.9% through its Mauritius-based subsidiary, Chatterjee Petrochem.

West Bengal Industrial Development Corporation holds another 21.9%, while the Bombay-based Tata group holds 7.3%. Political support in West Bengal for the petrochemicals complex - commissioned on April 2nd this year - is strong and enjoys the full support of chief minister Basu as a vote-catcher ahead of state elections in mid-2001.