IOC eyes stake in entire HPL complex

09 July 2001 00:00  [Source: ACN]

Indian Oil Corp (IOC) is once again considering taking a stake in Haldia Petrochemicals Ltd's (HPL) entire integrated petrochemical complex in Haldia, West Bengal, a senior IOC source said. A final decision is expected by end-August, the source said.

Last year, IOC was eyeing a stake in the entire complex (ACN 21 Feb, p5). However, earlier this year, IOC changed its stance to consider only HPL's 420 000 tonne/year cracker (ACN 18 June, p4).

The source would not disclose why IOC has decided to change its strategy again.

IOC has presented its latest proposal for the acquisition to HPL. Formal negotiations between IOC and HPL's promoters on the IOC proposal are expected to begin this week. IOC's proposal was drawn up on the basis of KPMG's asset valuation of HPL which was submitted to IOC last week.

Industrial Credit and Investment Corp has evaluated the assets for HPL.

The IOC source said no decision has been taken about how much equity IOC would take in HPL. 'Everything will depend on the price offer the promoters make,' he said. 'If everything goes well, the deal should go through by the end of this year.'

The proposed acquisition of the HPL complex has assumed added significance because of a deadlock over the sale of the Baroda complex of Indian Petrochemicals Corp Ltd (IPCL) to IOC.

The Indian government may decide to call for open bids for the Baroda complex if the cabinet committee on disputes fails to take a decision on the case by the end of this week, a source close to the negotiations told ACN.

The case was referred to the disputes committee late last month when IPCL and IOC reached a deadlock in their negotiations. The deadlock arose because of the the wide gap in the two companies' valuations of the complex. According to the source, IPCL's valuation is three times that of IOC.

If the government decides to opt for open bidding for the Baroda complex, it may also decide to sell, along with it, the government's majority stakes in IPCL's Gandhar and Nagothane complexes, the source said.

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