Cabinet may give nod to HPCL's Rs 37,229-cr refinery in Raj

HPCL is to hold up to 74% stake in the project, while the balance 26% will be with Rajasthan govt

The Cabinet is likely to consider tomorrow giving approval to Hindustan Petroleum Corp's Rs 37,229 crore refinery in Rajasthan, just ahead of the planned foundation stone laying of the project by UPA Chairperson Sonia Gandhi.

Gandhi is scheduled to lay foundation stone of the 9 million tonnes (MT) refinery at Pachpadra in Barmer district of Rajasthan on Sunday.

Approval for the project is listed among the agenda for tomorrow's Cabinet Committee on Economic Affairs (CCEA) meeting, official sources said.

HPCL is to hold up to 74% stake in the project, while the balance 26% will be with Rajasthan government.

Sources said the function at Pachpadra will also be attended by Rajasthan Chief Minister Ashok Gehlot and Oil Minister M Veerappa Moily.

Rajasthan government has also agreed to provide interest free loan of Rs 3,736 crore every year for 15 years from the date of commencement of production.

The same is to be repaid by the joint venture in equal annual installments from 16th years after commercial production commences for the next 15 years.

Sources said HPCL will have the marketing rights, including first right of refusal in respect of uplifting and purchase of all products (including petrochemials), which would be produced by the refinery.

The refinery, which is planned to go on stream in four years, will source half its crude oil from Cairn's Barmer oilfields, while the remainder will be imported.

Rajasthan crude has high atmospheric residue yield because of which its processing in the existing refineries poses capacity limitations.

A typical refinery of 10 MT per annum capacity designed for Middle East crudes will be able to operate at only about 6.5 MT, while processing neat Rajasthan crude due to hardware constraints in bottom upgradation sections of the refinery.

It for this reasons a specifically designed refinery is being proposed, they said.

Besides petrol, diesel and LPG, the project will also produce 2.3 MT of petrochemical products such as polypropylene, polyethylene and aromatics which are used for making plastic.

HPCL currently has two coastal refineries - a 6.5-MT plant in Mumbai and an 8.3-MT unit in Vishakapatnam. It also operates the 9-MT Bhatinda refinery in Punjab.