HPCL delays $3 bn Vizag refinery expansion over labour, monsoon: Report

State-run refiner had initially planned to complete the Rs 209.28 billion expansion in July.

Hindustan Petroleum Corp Ltd has pushed back the completion of a billion-dollar expansion at its southeastern Vizag refinery to at least October-November due to a labour shortage and the onset of monsoon, a company source said.

The state-run refiner had initially planned to complete the Rs 209.28 billion ($2.77 billion) expansion, which will nearly double the capacity of its coastal plant to 300,000 barrels per day (bpd), in July.

Many workers have returned to their hometowns due to the nationwide lockdowns to curb the spread of coronavirus, while the onset of monsoon has made it difficult to carry out construction work, the source told Reuters.

"Because of the lockdown we could not carry out the planned pre-monsoon work. We lost that window," the source said, asking not to be named due to sensitivity of the issue.

"We have not yet done our assessment but it seems completion of the project would be delayed to at least October-November."

HPCL did not respond to a Reuters' request seeking comments.

India has significantly eased the lockdown but a return to pre-COVID activity will take some time as inter-state transportation remain restricted and the virus cases are still rising.

Construction and mechanical work is usually held off during monsoon as a safety precaution, the source said. The four-month Indian monsoon season starts from June.

The expansion includes the replacement of a smaller crude distillation unit with a new 180,000 bpd at the refinery in Andhra Pradesh.

HPCL is also building facilities including a 0.352 million tonnes per year (tpy) naphtha isomerisation unit, a 3.053 million tpy hydrocracker and a power plant that can run on either naphtha or natural gas.

The project also involves the revamp of units including a 30% increase in capacity of naphtha hydrotreater to 1.5 million tpy and diesel hydrotreater to 2.86 million tpy, while the capacity of continuous catalytic cracker will be raised to 1.039 million tpy.