HPCL seeks private help for Bihar ops

Hindustan Petroleum Corporation Ltd (HPCL) will outsource operation and maintenance of its two integrated sugar mills in Bihar. HPCL’s wholly owned subsidiary HPCL Biofuels Limited (HBL) has invited proposals from experienced companies. Bids were received by the company on Friday and decision on winner will be taken in a week’s time. An industry official said Simbhaoli Sugars has bid for the tender among other players.

Since HPCL's real expertise lies in petroleum refining and marketing and not sugar manufacturing, bids have been invited from companies who have carried out and completed at least one operation and maintenance (O&M) contract service for an integrated sugar mill having sugarcane crushing capacity of minimum 1,750 tonnes and bagasse-based cogeneration capacity of minimum 5 MW or ethanol plant of at least 30 kilolitres capacity in past seven years.

The contract of O&M shall be for a period of one year which can be further extended by a year based on an escalated rate of 7 per cent of the purchase order in the first year and subject to the bidder’s performance. Further extension of another year shall be solely at the discretion of HBL.

In 2008, HPCL through HBL had acquired two sick sugar mills from the Bihar government on a 60-year lease, extendable by another 30 years. The mills are at Sugauli in East Champaran and Lauriya in West Champaran districts. The company had paid about Rs 95 crore for these two mills which were closed since 1996.

HPCL invested around Rs 650 crore in revising the two mills, which started crushing early this year. The two mills have a combined crushing capacity of 7,000 tonnes per day. Both the mills have a cogeneration unit that together will produce 40MW of power from bagasse during the crushing season and maize cobs and rice husk during the off-season. The ethanol plants at two locations will together produce 120 kilolitres of ethanol per day.

Being the country's first oil company to produce ethanol, HPCL will use ethanol from these plants for blending with petrol at 5 per cent in its depots in Bihar and Jharkhand. The surplus will be sold to other oil marketing companies.