India: Nagarjuna Oil Resolution Plan Date Extended

Nagarjuna Oil Corporation Ltd (NOCL) is back on the block after the Committee of Creditors (CoC) of the firm was left dissatisfied by Bharat Petroleum Corporation Ltd’s (BPCL’s) resolution plan presented recently, according to a report in the Hindu Business Line newspaper.

Two companies including BPCL submitted their resolution plans in a meeting held on March 23.

The Resolution Professional appointed by the National Company Law Tribunal (NCLT) extended the last date for short listed bidders to submit a plan to revive the refinery project planned at Cuddalore in Tamil Nadu. Bidders now have up to March 31 to submit their plans.

Bids are invited from applicants who have already been vetted in the Expression of Interest stage. The bid process and conditions remain unchanged.

BPCL emerged the sole contender for the project but fell short of CoC’s expectation in its presentation as it reportedly declined to take up the project in its entirety.

BPCL told the CoC that it is not interested in completing the outdated six-million-tonne refinery project, but it will implement projects in the oil and gas sector. It is said to have baulked at the complications associated with the company and its contractors.

BPCL also had an issue with the liquidation projected cost of around Rs. 1,500-crore since it felt that out of the 2,100 acres with NOCL, only around 500 acres is owned by the company and the balance 1,600 acres belong to State Industries Promotion Corporation of Tamilnadu Ltd. (Sipcot). If NOCL is liquidated, the land owned by Sipcot cannot be sold by the lenders.

The other contender Citax Ventures of UK had not paid the Rs. 10-crore bid security amount as set out under the NCLT procedure and its bid was not considered. It is significant that the backers of Citax Ventures are also associated with Netoil of Singapore which previously made a bid for the project but failed to bring in the funds. Nagarjuna Oil subsequently went into liquidation.

The CoC reportedly felt BPCL’s bid was too low and said they would have to call fresh bids if BPCL did not increase its offer to the lenders. BPCL took strong objection to this on the ground that other potential bidders would now know the details of its bid terms and would have an unfair advantage.

The resolution plan has to be selected and sent to NCLT by April 20.

The project, for which the construction work started in 2009, had been partially completed in December 2011, when a cyclone and shortage of funds stopped work.

The project was promoted by the Hyderabad-based Nagarjuna Group. Following project delay and cost overruns it came under the purview of the NCLT last year and a resolution professional called for bids last October.