State-owned Indian Oil Corporation (IOC) announced on Thursday its decision to increase its stake in the joint venture responsible for constructing a 9 million tonnes refinery in Chennai to 75 per cent. This decision comes after the project's cost escalated by over 12 per cent. Initially, IOC and its subsidiary Chennai Petroleum Corporation Ltd (CPCL) were slated to hold a 25 per cent stake in the joint venture, with the remaining 50 per cent equity coming from financial investors.
In a filing with the stock exchange, IOC stated that its board, during a meeting on Thursday, "approved the revision in the project cost from Rs 29,361 crore to Rs 33,023 crore." Additionally, the board approved a change in the capital structure of the joint venture, with IOC holding 75 per cent equity and CPCL holding 25 per cent.
The reasons for the cost escalation were not provided by the company.
IOC's board had previously approved the implementation of a 9 million tonnes per year refinery at Cauvery Basin, Nagapattinam in Tamil Nadu, by CPCL on January 29, 2021. This refinery aimed to address the demand for petroleum products in southern India. Approval was also granted for the formation of a joint venture between IOC and CPCL, with an equity holding of 50 per cent each, alongside the involvement of financial/strategic/public investors. Consequently, the joint venture company named 'Cauvery Basin Refinery and Petrochemicals Ltd' (CBRPL) was incorporated on January 6, 2023.
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