Nagarjuna Oil Corporation’s 6-million-tonnes-a-year refinery is on the block, with the National Company Law Tribunal-appointed Resolution Professional calling for Expressions of Interest from prospective investors.
The refinery at Cuddalore, about 200 km from Chennai, was scheduled to be commissioned in 2002 at an investment of around ₹3,500 crore. But owing to delays and cost overruns, the estimates mounted to ₹12,500-18,000 crore, and the commissioning was pushed to 2017. But a storm in December 2011 hit the project hard and it was stalled.
A debt recast was attempted, with a consortium 17 public sector banks cutting their losses. They were, however, to bring in an additional ₹7,000 crore debt as part of the restructuring. However, the plan too fell through.
The Hyderabad-based Nagarjuna Oil Refinery, which is setting up the project, held a 46.78 per cent stake (77.62 crore shares) in Nagarjuna Oil Corporation.
Other shareholders included TIDCO, a Tamil Nadu government industry promotion agency, with 1.65 per cent (2.74 crore shares); Trafigura 19.79 per cent (32.84 crore shares); Tata Sons 12.70 per cent (21.07 crore shares); Tata Petrodyne 12.11 per cent (20.08 crore shares); Cuddalore Port Co 3.66 per cent (6.07 crore shares); and Udhe Gmbh 3.31 per cent (5.48 crore shares).
The NCLT-appointed RP has called for applicants to submit a proposal by October 31. The applicants should have a minimum consolidated net worth of ₹500 crore ($77 million) as of March 31, 2017.
The RP said that with funds infusion, the project can be commissioned in two-three years after completing the balance work. The plant is capable of meeting E-VI norms with some additions. Statutory clearances are in place, though some of them need to be renewed.
This is a critical project for Tamil Nadu as the refinery was an anchor for the proposed PCPIR (Petroleum Chemicals and Petrochemical Investment Region).
It was the largest private sector investment in the State and figured prominently in the Global Investors Meet 2015 organised by the State government. The government had also proposed an incentive package.