(PTI)
State-owned Bharat Petroleum Corp Ltd (BPCL) has been forced to pay for its defaulting partner Videocon Industries Ltd after it had relied on a rarely used model to acquire stake in five oil blocks in Brazil, sources said. In September 2008, BPCL and Videocon Industries had formed a 50:50 joint venture to acquire a Brazilian oil exploration firm for USD 283 million.
The two firms formed an incorporated joint venture IBV Brasil Petroleo Limitada to acquire Encana Brasil Petroleo Limitada from Canadian gas producers EnCana. Sources said usually such acquisitions are done through unincorporated joint ventures but BPCL chose to form an incorporated joint venture. Incorporated joint venture is organised as separate and distinct legal entity. And the entire entity is held in default if any one of the partners doesn’t pay for its share of cost.
