The Hindu Business Line : Rising under-recoveries — IOC puts off Panipat naphtha cracker plans

According to highly placed sources, IOC has put off its planned investment of Rs 6,300 crore in a naphtha cracker facility at its existing refinery complex at Panipat in Haryana.

The naphtha cracker project was scheduled to be implemented latest by 2008. It was part of an ongoing Rs 11,800-crore investment plan for doubling the refining capacity, creation of supply logistics and setting up a petrochem facility.

The first phase, for enhancing refining capacity from six million tonnes to 12 m.t., estimated to cost nearly Rs 5,100 crore, is in the final phase of implementation and will be completed in October this year. The company had already finalised the project configuration and investment in the naphtha cracker unit in the second phase.

"Our plan to enter into petrochemicals is jeopardised," a senior IOC official told Business line.

The company has already announced the delaying of the proposed Rs 15,000-crore integrated refinery-cum-petrochem complex at Paradip in Orissa, the first phase of which is scheduled for completion in 2009. IOC was particularly keen on implementing the Paradip refinery project this time, as it would have served the purpose of an export hub. However, unlike Panipat, the company was yet to finalise the detailed feasibility report and the project configuration study at Paradip.

IOC has been targeting an entry into petrochem through the organic and the inorganic route for the last couple of years. On the acquisition front, it was outbid by Reliance in the case of IPCL, and its efforts for picking up even a minority stake in Haldia Petrochemicals Ltd is still to fructify.

On the refining front, plans for enhancing the capacity of the company's biggest refinery at Koyali in Gujarat from 13.7 m.t. to 18 m.t. is now put on the backburner.

The ongoing Rs 3,600-crore investment for product upgradation and change in process configuration, however, will continue to match the guidelines of the National Auto Fuel Policy.

While there are opportunities of higher realisation in the export market, IOC has so far failed to capitalise the same to the fullest extent, as most of its refineries are located in the hinterland. The Koyali-Dahej pipeline for carrying petro-products, now under implementation, is expected to help in this direction. The project is scheduled for completion in 2006.

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Rising under-recoveries — IOC puts off Panipat naphtha cracker plans