IOCL delays commissioning at plant at Paradip

While HPCL revives proposal to set up plant in AP PCPIR zone

The proposed grassroot refinery by Indian Oil Corporation Ltd at Paradip Petroleum Chemicals and Petrochemical Investment Region (PCPIR) in Odisha will be further delayed and is now likely to be commissioned in 2015.

According to officials, the project was to be commissioned by end of 2014 but is getting delayed due to logistics problem.

Meanwhile, Hindustan Petroleum Corporation Limited (HPCL) has revived its plan to set up Rs 10,000 crore for upgradation of Vishakh refinery from 7.5 to 15 MMTPA. Now the new Andhra Pradesh government has assured new land allotment either at Nakapalli or In the Kakinada Special Economic Zone ( SEZ).

HPCL is also in talks with new foreign investors for this project specifically from the West Asia and Saudi Arab region. It has re-started the feasibility study with the help of another partner Gas Authority of India Ltd ( GAIL) and Engineers India ( EIL).

This project is slated  for Andhra Pradesh Petroleum Chemicals and Petrochemical Investment Region. The Andhra Pradesh PCPIR as a whole got delayed as the proposed  Visakh area got classified as a critically polluted zone by Central Pollution Control Board (CPCB) where there is a general embargo on further capacity expansion for industries in the Visakh bowl area. The project envisaged expansion of the refinery from its present 8.4 MMTPA capacity to 15 MMTPA.

Besides it proposes to set up new 15 MMTPA refineries cum petrochemical Complex at a cost of Rs 32,000 crore. The new Andhra Pradesh government has decided to allot new land to the PCPIR as the old area has run into environmental problems.

For the Paradip refinery, the  proposed project would cost around Rs 30,000 crore in the first phase. A petrochemical complex will be set up at a later date depending on the market conditions, said official sources. IOCL has already invested Rs 22,000 crore. The total investment of the project is around Rs 2,80,000 crore is expected out of which committed investment is of the tune of Rs 29,777 crore.

The state government of Orissa has already invested Rs 1,800 crore and private participation has been around Rs 11,000 crore. The government of India has already approved viability gap funding of Rs 716 crore. Paradip PCPIR is a brown field project where a special purpose vehicle (SPV), Paradip Investment Region Development Ltd. has been formed to implement the project.

Various projects contingent upon this Paradip PCPIR are coastal corridor Dhamra Port-Paradip PCPIR- Astarang Port (140 km), Bhubaneswar-Paradip PCPIR- Greenfield Corridor (73 km) and other internal arterial road within the PCPIR area.

As for the Andhra Pradesh PCPIR, the  joint venture with GAIL and other foreign investors is likely tom ease the cash flow situation which was one of the reasons as to why the PSU refinery HPCL was unable to commit funds for this project. Besides, there is an oversupply of polymers in the Indian market over and above heavy imports. Due to an inverted duty structure wherein the raw materials attract higher duty compared to the processed polymer and plastics, many traders import raw material.