Fresh MoU with IOCL for Paradip refinery likely

State fumes over no firm deadline for investment in PCPIR

The state government has decided to sign a fresh Memorandum of Understanding (MoU) with Indian Oil Corporation Ltd (IOCL) for its refinery project at Paradip to include fixed timeline for investment at Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR).

The state-run company, which is already behind schedule in building the refinery, has been dragging its feet over the proposal to be anchor tenant of the PCPIR, the government alleged.

“They (IOCL) had earlier given a commitment to set up a downstream petrochemicals complex (DPC) which was supposed to be the anchor tenant for the PCPIR. It appears that they have not given any firm timelines for DPC. It will be appropriate to renegotiate a fresh MoU fixing firm timelines for DPC after which water allocation may be considered,” Chief Minister Naveen Patnaik has noted in a file sheet of the state water resources department. After the chief minister’s order, the water resources department requested the Industrial Investment Promotion Corporation of Odisha Limited (Ipicol) to take steps to sign a fresh agreement with the oil marketing major.

The company, which has been setting up the refinery since 2000, has faced various hurdles including slump in the oil market, land and labour problems, delay in commissioning of the captive power plant and protests over laying of water pipelines from Mahanadi to the plant site.

Originally envisaged to be a 6-mtpa (million tonnes per annum) refinery at an estimated investment of Rs 8,300 crore, the capacity was raised to 15-mtpa later.

As per the earlier commitment of the company in 2010, work on the petrochemical complex was expected to begin two years after the commissioning of the refinery. IOCL had agreed to develop a poly-propylene unit, an ethylene derivate plant as well as mixed feed cracker unit in the proposed PCPIR.

Since the refinery project is already behind the schedule, the state government wanted a fresh agreement mentioning fixed deadline for the petro complex project.

IOCL, however, has recently expressed confidence to commission the first phase of the refinery project by September this year.