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Balaji C. Mouli

New Delhi , Aug. 28

ESSAR Oil Ltd has offered to buy out other stakeholders in Petronet Central India (CI) Ltd, a petro-product pipeline company.

Petronet CI Ltd got the Government's nod in 1999 to set up a pipeline to transport petro-products from Essar's refinery in Vadinar and Reliance's refinery in Jamnagar to the hinterland regions of the country.

The project has since then hardly made progress save right of way (RoW) approvals for a few hundred kilometres.

Meanwhile, Reliance has gone ahead to set up its own product evacuation pipelines, expression of interest (EoI) for which was recently issued. The EoI relates to the Government's new pipeline guidelines, under which the pipeline sponsor has to provide for spare capacity, for which the latter must call for applications from potential users.

Essar offered to buyout the other equity holders in Petronet CI Ltd in a board meeting held late last month. The project promoters are Petronet India Ltd, Indian Oil Corporation Ltd, Reliance Petronet Ltd at 26 per cent apiece besides Bharat Petroleum Corporation Ltd (BPCL) and Essar Oil Ltd at 11 per cent apiece.

Essar is setting up a 10.5 million tonne refinery. Meanwhile, Petronet India Ltd has protested to the Petroleum Ministry about Reliance's Jamnagar-Kanpur pipeline, which overlaps its 1,760-km Central India pipeline project.

PIL has argued that its project got the Government nod sometime in late 1999 and so duplication of assets should be avoided.

Senior Government officials, when contacted, said that under the new policy, which aimed to usher private participation in the sector, there is no restriction on the setting up of pipelines along the same route. "The rationale is that if such projects are bankable and are not dependent on government support, they can go ahead," a senior Government official said.

PIL is a creature of regulation in the petroleum sector till April 1, 2002 when petro-products were sold only by public sector marketeers.

Pipelines could be set up only through joint ventures with Petronet, a consortium promoted by public sector oil companies — Indian Oil Corporation Ltd, Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd, till the new policy came along in November 2002.

Reliance took a plunge and applied for licences to set up six pipeline networks grossing 5,895 km to be built at a cost of over Rs 4,500 crore. These will be built under a `common carrier principle' under which a quarter of the capacity will be offered to other users.

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