The acquisition of Nagarjuna Oil Corporation by Netoil (Singapore) has fallen through with the holding company Nagarjuna Oil Refinery deciding not to follow up on the proposal.
Nagarjuna Oil Corporation (NOC) is in the process of setting up a six-million-tonne-a-year refinery in Cuddalore, Tamil Nadu.
Nagarjuna Refinery, which holds a 47 per cent stake in NOC, had announced last September that Netoil was carrying out a confirmatory due diligence ahead of acquiring the stake.
Nagarjuna Refinery has informed the BSE today that the board of directors of the company have unanimously resolved not to pursue the transaction with Netoil.
Apart from Nagarjuna’s stake, Netoil was to have bought out the stakes of other significant investors in the project, including Tata Group’s 25 per cent, Trafigura’s 20 per cent and Cuddalore Port Company and Uhde, Germany, stakes of two per cent each.
The refinery about 100 km south of Chennai on the east coast was touted as the largest private sector investment in Tamil Nadu.
It was to have been commissioned in 2002 at a cost of ₹3,500 crore, but continuous delays and cost over-run have contributed to the project cost mounting to ₹12,500-18,000 crore with the possibility of being commissioned in 2017.
Last September, the Tamil Nadu government had extended a structured package of incentives, including VAT refund, apart from concessions and subsidies.
A debt restructure was also on the anvil with a consortium of 17 public sector banks having to cut their losses.
The total investment in the project was estimated at ₹8,000 crore, including ₹4,500 crore expenditure and ₹3,500 crore interest.
The banks were to have brought in an additional ₹7,000 crore debt as part of the restructure, sources had said when Netoil proposition was planned.
Sources associated with the project said that other investors have evinced keen interest in the project but declined to provide any details.