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Supply deals pave way for IPCL privatisation

India's second-largest petrochemicals maker IPCL has completed long-term supply agreements, it said on Tuesday, clearing the way for bids to be tabled for the controlling stake being sold by the government in the state-run giant.

IPCL has been getting gas from state-run Oil and Natural Gas Corp at half the prevailing international price, an arrangement certain to change because of the IPCL stake sale and deregulation of the Indian petroleum market.

On April 1, the government stopped setting retail prices for oil and gas products, abolished a complex cross-subsidy system and began allowing any company which met certain conditions to set up a distribution network.

"Indian Petrochemicals Corporation Ltd has ironed out all outstanding issues with suppliers of raw materials and fuels," the company said in a statement.

"Long-term supply agreements with well-defined pricing mechanisms have been arrived at."

The statement did not provide details of the agreements, but did give details of IPCL's financial performance over the past year to March.

IPCL sold 1.5 metric tonnes of petrochemical products, up eight per cent from a year earlier, it said.

Revenue totaled Rs 55 billion, and the company repaid $176 million in March to holders of its foreign currency convertible bonds.

IPCL also said all three of its plants were operating nearly at or above capacity.

"Production volumes at Vadodara and Nagothane complexes were 102 per cent and 104 per cent of capacity respectively.

"The new complex at Gandhar touched an all-time high production level of 97 per cent of the operating capacity," the statement said.

Divestment Secretary Pradip Baijal said on April 3 that the government would wrap up its stake sale in IPCL within a month.

Three companies -- state-run refiner Indian Oil Corp, the nation's largest petrochemicals make Reliance Industries Ltd, and detergent maker Nirma Ltd -- are in the race to acquire control of IPCL.

The government holds a 59.75 per cent stake in IPCL and plans to sell a 26 per cent stake under a privatisation programme from which it hopes to raise Rs 120 billion in the year to March 2003.

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