Essar Oil, which will be India's second largest private oil refining company when its 12 million tonne refinery at Vadinar goes on stream, has revived its three-year-old plan to rope in a strategic partner for the beleaguered project.
The company was in talks with Russian and Chinese firms for equity participation, and a separate long-term alliance for crude supply, sources close to the company said.
The refinery project, stalled after a cyclone in 1999, is expected to go on stream by 2005.
Essar Oil's global tender, placed on its website, seeking expressions of interest from potential equity partners says, "With a view to consolidate its market presence, Essar Oil also plans to expand its refinery to 540,000 barrels per stream day, or 27 million tonnes per annum, as the Indian market continues to develop and grow."
It does not say when it plans to expand capacity. Reliance Industries, India's largest private oil refiner, operates a 27 million tonne plant, which is slated to be expanded to 33 million tonnes.
"The refinery project was delayed for some time pending full financial closure, which has now been achieved," Essar Oil has pointed out in its tender.
The company has mobilised its workforce to begin construction at Vadinar, after receiving an assurance of fresh funds in principle from financial institutions.
Essar Oil executives declined to comment on the issue. The company was earlier in talks with state-owned Bharat Petroleum Corporation, Oman Oil Company and Kuwait Petroleum to offload around a 26 per cent strategic stake, but they fell through.
Essar and Reliance are the only two private players in the Indian oil refining industry. The AV Birla group sold its stake in Mangalore Refinery & Petrochemicals to Oil and Natural Gas Corporation.
Essar has also received a licence for retail sales of petroleum products. It proposes to set up a network of 1,700-2,000 outlets across the country to hawk "not just gasoline, but also non-fuel products and services through convenience stores, fast food outlets, cyber cafes and ATMs."
Besides inviting a strategic alliance for the refinery and for marketing oil, the company has also invited bids for participation in specific areas such as supply of crude oil to the refinery, offtake of products to overseas markets, and financial services such as export securitisation and hedging.
Essar is setting up the refinery under a turnkey contract with ABB Lummus of Holland at an investment of $2 billion, "of which over $1.2 billion has already been spent," the company said in the tender.
