IndianOil may buy stake in Nagarjuna’s Cuddalore refinery

More than a decade after it declined to take a stake in Nagarjuna Group's refinery in Tamil Nadu, state-owned Indian Oil Corp (IOC) is looking at buying equity stake in its six million tonnes a year Cuddalore refinery.

IOC has held preliminary discussions on a possible equity stake in the project, highly placed sources said. The move follows talks by Singapore-based Netoil to buy a stake in Nagarjuna Oil Corp (NOCL) broke off in February this year. Nagarjuna Oil Refinery Ltd (NORL) holds 46.78 per cent of the equity share capital of Nagarjuna Oil Corporation (NOCL). 

Tatas too are a shareholder in the refinery. Sources said IOC had in 2002 declined to take a majority stake in the project on the grounds that the country has surplus refining capacity. Also, it had reasoned that the IOC subsidiary Chennai refinery was being expanded and a new 15 million tons a year refinery being set up at Paradip in Odisha to cater to the fuel demand in the southern and eastern India. Chennai refinery has since been expanded to 10.5 million tons and the Paradip refinery commissioned recently.IOC has now begun discussing the equity participation in the project again, they said.

Nagarjuna Oil Refinery had in September last year stated that a confimatory due diligence of NOCL was being undertaken by Netoil to acquire the project for Rs 3,600 crore.