The country’s biggest downstream oil company Indian Oil Corporation (IOC) expects to achieve financial closure for its upcoming Paradip refinery by January end.
The company is also re-working the cost of the refinery because of downward price revisions of constructions equipment and price of steel and cement in the last six months.
Sarthak Behuria, chairman and managing director, IOC, said, “We are currently re-working the cost of the refinery and are hoping that it comes down.”
The financial closure is also expected sometime very soon, he said. He was talking to newsmen at the sidelines of country’s biggest petroleum conference — Petrotech 2008 in New Delhi.
The 15 million tonne per annum (mtpa) Orissa-based Paradip refinery was announced in 2000 and has been in limbo for a long time because of cost overruns and administrative problems in Orissa. However, after several revisions the cost of the refinery was finally fixed at Rs 26,000 crore. This cost also included a petrochemical complex. And lately, it was revised up to Rs 45,000 crore including the petrochemical plant.
But owing to cost escalations and delay in implementation, the company in 2008 decided to put the petrochemical plant on hold and complete only the refinery by April 2012.
“The petrochemical plant is not shelved; it has only been postponed for the time being. We want to complete the refinery first,” said BN Bankapur, director — refineries, IOC.
He said the process of re-working the cost is a long drawn process and will take at least five to six months to complete. The current estimated cost of the refinery is over Rs 29,000 crore.
He said though the company was hoping that the cost of the refinery comes down under current market conditions, but the dollar-rupee fluctuation may play spoilsport, he said.
Bankapur said IOC will be augmenting its refining capacity by 4.5 million tonne in 2009 which will include 3 mtpa at Panipat and 1.5 mtpa at Haldia. This will take the total refining capacity of the company individually to over 50 mtpa.
The company plans to take the refining capacity of the group to 80 mmtpa by the end of the XIth Five-Year Plan of the government of India, which ends in March 2012, which will include 2.35 mtpa Bongaigaon Refinery and Petrochemicals Ltd (BRPL) and 10.5 mtpa of Chennai Petroleum Corporation Ltd (CPCL).
IOC is the biggest public sector oil marketing company which had been, for long, bearing losses on account of selling fuel at below market price and had been heavily subsidised by the government.
However, in the face of price of crude coming down substantially from $147 in July to around $40 in six months, the company has started making profits on the sale of petrol and diesel. According to industry sources the company had been making a profit of Rs 6-7 per litre of petrol and Rs 1-2 per litre of diesel. But it is still losing money on PDS kerosene and LPG by Rs 12 and Rs 35, respectively.
