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Assess viability of Kakinada refinery, Ministry tells ONGC

Our Bureau

Second project that ONGC would be revisiting


Glut likely
The company has been asked to prepare a feasibility report, as there is going to be a glut in the East coast over next three years with the Indian Oil Corporation increasing the capacity of its proposed Paradip refinery to 15 mt per annum and Hindustan Petroleum Corporation Ltd and Chennai Petroleum Corporation Ltd also planning to raise capacities of their respective refineries in the region

New Delhi , July 25

Oil & Natural Gas Corporation (ONGC) is likely to take a second look at its proposed 7.5-million-tonne a year greenfield refinery project at Kakinada, Andhra Pradesh.

The company has been asked by the Petroleum Ministry to study the financial viability of its proposed refinery at Kakinada before tying up resources for the project from financial institutions, official sources said.

"They have to come back to us to convince us about the financial viability of the project," official sources said. The company has been asked to prepare a feasibility report, as there is going to be a glut in the East coast over next three years with the Indian Oil Corporation increasing the capacity of its proposed Paradip refinery to 15 mt per annum and Hindustan Petroleum Corporation Ltd and Chennai Petroleum Corporation Ltd also planning to raise capacities of their respective refineries in the region, they told Business Line.

This would be the second refinery project after the one proposed in Barmer, Rajasthan that ONGC would be revisiting. Mangalore Refinery and Petrochemicals Ltd (MRPL), a subsidiary of ONGC, had signed a MoU for setting up a refinery and special economic zone (SEZ) at Kakinada. Apart from MRPL, other participants in the project are Infrastructure Leasing and Financial Services Ltd. (IL&FS), Kakinada Seaports Ltd, and the Andhra Pradesh Government. MRPL and ONGC will hold 46 per cent equity, Andhra Pradesh Industrial Infrastructure Corporation will hold 3 per cent and IL&FS will hold 51 per cent in the project. Total investment in the refinery is expected to be about Rs 5,500 crore and investment in the SEZ will be above Rs 1,000 crore.

The refinery, called Kakinada Refinery and Petrochemicals Ltd, was proposed to process 5 mt of crude oil and could be upgraded to process 7.5 mt.

HPCL is planning to set up a 15-mt export-oriented refinery at Visakhapatnam besides expanding the capacity of its existing 7.5-mt refinery. HPCL , which has an existing refinery capacity of 10.5 mt a year, plans to add another 3 mt.

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