Indian Oil Corporation refuses stake sale offer in Nagarjuna oil project.

Indian Oil Corporation has rejected an offer to buy a stake in a project of the financially-stressed Nagarjuna Oil Refinery and help resurrect it, arguing that the project's technical configuration and financial burden were a hurdle, according to company executives and officials.

Indian Oil took the decision recently following a due diligence on the proposed refinery. At a recent meeting, Indian Oil executives conveyed this to officials of the Prime Minister's Office (PMO), sources said. More than six months back, the government had suggested Indian Oil, Bharat Petroleum and Hindustan Petroleum consider buying a stake in the Nagarjuna refinery project. All three were hesitant but Indian Oil undertook a due diligence. It had considered investing in the project in Tamil Nadu more than a decade back. Nagarjuna Oil Refinery, which is setting up the refinery, is controlled by Nagarjuna group that owns about 35% of the firm. The group, led by KS Raju, also has fertilizer units.

'There has been no construction activity at the project site for almost four years since the time cyclone hit the place, while the financial burden has been mounting,' said a source. The project suffered damage in December 2011 cyclone and hasn't been able to overcome its impact since. The company has been engaged with multiple potential investors but hasn't clinched a deal yet and arrange necessary finance to complete the project.

ET