Nagarjuna Oil Corporation, which is setting up a refinery in Tamil Nadu, has initiated talks with the royal family of Saudi Arabia for a possible strategic investment as it attempts to complete the project that has been held up for over four years now.
In addition, public sector oil companies, led by IndianOil, are also being nudged by the government to look at possible equity investment.
Sources said talks with the Saudi royal family were initiated earlier and the lenders and the PM’s Office, which began monitoring the project a few months back, were informed about the discussions around six weeks ago.
In fact, the government has taken it up with some Saudi officials and the promoters have been advised to pursue the issue.
A source said equity infusion from the Saudi royal family would depend on discussions at the bilateral level. Prime Minister Narendra Modi as well as petroleum minister Dharmendra Pradhan recently visited Saudi Arabia and oil was clearly the main item on the agenda.
The Nagarjuna Oil refinery, which will have an annual capacity of six million tonnes in the first phase, is nearly 60% complete but has been held up since a cyclone hit Cuddalore in December 2011. It has been identified as one of the projects that the PMO is pushing for completion.
Last September, the lenders had got a due diligence done and were targeting completion in 24-26 months. The exercise showed that an additional funding of over Rs 11,600 crore was required, with around Rs 3,800-crore equity required and the remaining Rs 7,800 crore coming in the form of loans. The overall project cost was pegged at just under Rs 20,000 crore.
Sources said that the project has received environmental clearance, financial assistance through VAT refunds and has access to port to import crude and ship out refined products. “It is a question of arranging funds, which is possible, and we are willing to undertake some restructuring to ensure that the project is completed,” said a banker.
Sources said that a consortium of lenders led by IDBI Bank was willing to provide additional funding, extend the repayment period and also convert a part of the interest component into equity or preference shares to ease the repayment burden. Chandler Catanzaro Authentic JerseyShare This