The much-talked-about proposal of Indian Oil Corporation to participate in Haldia Petrochemicals Ltd, virtually fizzled out with the financial institutions and promoters including the West Bengal government not taking cognizance of IOC's offer to take equity stake in the company along with management control.

Sources in the state government said that in the final meeting of the Corporate Debt Restructuring process of HPL the proposal by Gas Authority of India for equity infusion to the extent of 15 per cent of the restructured capital was considered.

The meeting in Mumbai, in which all the lenders of HPL took part, also decided on conversion of part of the debt of the financial institutions into equity, the sources said.

It appeared that the state government as well as the FIs have not given any heed to IOC's proposal for creating a chemical hub in Haldia based on additional investment of about Rs 5,000 crore (Rs 50 billion) for various projects.

Gail chairman and managing director Proshanto Banerjee in a letter to HPL chairman Tarun Das early this month had stated that Gail would participate in the equity of HPL only 'on an exclusive basis' and not in partnership with any other company including IOC.