After a three-year wait, Cals set to cart in refinery
Cals Refineries’ proposed petroleum refinery at Haldia in West Bengal may be closer to reality
following an out-of-court settlement reached with the German company contracted with supplying equipment for the unit.
The project was to be set up with equipment from three dismantled refineries, the first of which was Bayernoil Raffinerie GmbH’s 45-year-old, 90,000 barrels per day (bpd) unit in Ingolstadt along the river Danube. Spice Energy promoted Cals had in 2008 signed an agreement with Lohrmann International GmbH for dismantling and relocating the Bayernoil refinery.
However, Cals and Lohrmann went to Delhi High Court last year over execution of the agreement and later decided to settle the conflict through arbitration by the tribunal of Indian Council of Arbitration.
The promoters’ inability to raise funds in the aftermath of the global economic crisis also delayed the project.
The delay has taken a severe toll on the stock of Cals, which is listed on the Bombay and Luxembourg stock exchanges. From around Rs6.55 per share of face value Rs1 in 2008, it is quoting at just 44 paise now.
Following the out-of-court settlement, sources said, the shipment is expected to commence next week.
As per the last timeline disclosed by the company, the project is to get commissioned in the fourth quarter of this fiscal, a delay of about 2 years from the initial estimates.
Cals, meanwhile, has taken steps to further expand the capacity to 200,000 bpd in Phase II from 100,000 bpd in the first phase.
The company in March mandated turnkey contractors Saipem of Italy with the job of carrying out a feasibility study for the 200,000 bpd Haldia refinery project.
The contract also stipulated that if the feasibility report is accepted within 80 days, the Italian contractor would be awarded the EPCC contract for the project.
The capacity for the second phase would come from translocation of two other refineries —- one from Cenco Refining Company of California and another from Atas Refinery in Turkey —-bought from hedge fund and real estate player the Hardt Group, for which the parties had earlier entered into an agreement.
Cals has planned a Rs1,425-crore global depository receipt (GDR) issue to finance the deal, but the government in June referred the proposal to the Cabinet Committee on Economic Affairs.
Cals would pay for the refineries by issuing the GDRs to affiliates of Hardt worth $317 million, while the balance $100 million would be in cash at a later date. Before that, Hardt would have to procure the equipment, get them refurbished and get them delivered to Haldia.
Cals said in May that it has allotted shares worth Rs94.79 crore to Abboro Ltd, an affiliate of Hardt.
Cals has also signed an agreement with Mohammed Abdulmohsin Al-Kharafi & Sons Co of Kuwait for raising $150 million through the GDR issue.
In the third phase, Cals will implement an additional 200,000 bpd greenfield capacity, taking the total capacity to 400,000 bpd.
In 2008, Cals had announced that oil major BP would be supplying the crude requirement for the phase I capacity for about 10 years and would also buy back 65% of the production at market prices. It is not known if that agreement is still valid, considering the long delay suffered in project execution.
Source : www.dnaindia.com