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IOC drops plan to take stake in Indonesian refiner

Pratim Ranjan Bose

Kolkata , Nov 15

IOC is unlikely to pick up stake in Indonesia's State refiner, PT Tuban Petrochemicals Industries but may seek board approval soon for marketing premium fuels like high-octane gasoline, which are already de-regulated by the Indonesian authority.

Large-scale retailing of auto fuels will only be taken up following decontrolling of the sector.

"We are not picking up any stake in PT Tuban and will restrict our activities in downstream marketing," a senior IOC official said on Wednesday.

"We will place the proposal for approval of the board at its next meeting scheduled this month."

Stating that the company would not like a repetition of its Sri Lankan experience, whereby downstream marketing resulted into mounting under-recoveries, sources said that this time IOC would play it safe by entering the market only with the de-regulated premium products.

"We will be waiting for the deregulation of the auto fuel market to exploit the full potential of downstream marketing in the country," the official said.

On the BSE on Wednesday, the IOC scrip closed at Rs 493.95, up from the previous close of Rs 491.80.

IOC will be the third foreign entrant after Shell and Petronas of Malaysia in downstream petroleum product marketing in Indonesia.

Both the early entrants are reportedly following a wait-and-watch policy and have restricted their presence to a limited number of outlets.

The Indonesian Government holds 70 per cent of Tuban Petro.

The company has a combined petrochemical capacity of 3.6 million tonnes, including one million tonnes of aromatic products.

The other stakeholders in the company include Pertamina, Itochu Corporation, Tuban Petrochemicals Pte Ltd and Sojitz Corporation.

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