The Committee of Creditors for Nagarjuna Oil Corporation Ltd (NOCL) will meet for the last time on April 19 to decide on the fate of NOCL’s 6-million-tonne refinery that is on the block under the corporate insolvency resolution process.
With the 270-day period under the IBC ending on April 20, lenders have two options: either recommend one bidder to NCLT by that date, failing which the project goes into liquidation.
‘Uncertainty persists’
The interim resolution professional had called for bids for the third time on April 4, for revival of the project, after the first two rounds of bidding had BPCL as the sole bidder but its offer was said to be well way below the liquidation value of ₹1,450 crore. However, according to sources, even the third-round bids may not meet the lenders’ expectations and that there is a possibility of NOCL going into liquidation.
According to sources, the Committee of Creditors met on April 17 to consider the four bids received by April 16 in the third round. The bidders had made presentations to the lenders.
BPCL had made the same offer as in the last two rounds, despite the COC asking oil major to raise the offer to match ₹1,450 crore.
Second bidder Citax Ventures, which failed to even pay the bid security of ₹10 crore in the last two rounds, made the ‘highest’ bid, exceeding the ₹1,450 crore liquidation valuation. The same promoter had failed three times earlier as NetOil.
The third bidder was Gulf PetroChem which did not submit the bid security amount, a mandatory requirement. The fourth bidder was Haldia Petrochemicals Ltd. Its bid was conditional that it could give only one third of the valuation amount upfront and the rest would be paid after the due diligence was complete.
NOCL was setting up the refinery in Cuddalore on the East Coast. Time and cost overruns resulted in the ₹3,500-crore project, intended to start in 2012, growing to ₹15,000 crore.In December 2011, the project site was hit by a cyclone and work was stalled.
The total investment in the project at that time was estimated at ₹8,000 crore, including ₹4,500 crore expenditure and ₹3,500 crore interest. A consortium of 17 banks, which funded the project, was to have brought in an additional ₹7,000 crore debt as part of a restructuring which did not materialise.
The Hyderabad-based Nagarjuna Oil refinery, which promoted the project held a 46.78% stake in Nagarjuna Oil Corporation. Other shareholders in the project include TIDCO, the Tamil Nadu government industry promotion agency, with 1.65%; Trafigura 19.79%; Tata Sons 12.70%; TataPetrodyne12.11%, Cuddalore Port Co 3.66% and Udhe Gmbh 3.31%.
The NOCL Refinery project was one of the biggest project for Tamil Nadu and the tax incentives for the project was signed at the Global Investors meet held in 2015.
