IOC's Haldia plant facing pressure due to HPL closure

Closure of Haldia Petrochemicals (HPL) is having an impact on Indian Oil's refinery in Haldia as the plant is bearing extra cost to route its naptha to other facilities so that inventory does not stockpile. Operations at HPL are suspended since July 7 due to a shortage of working capital, though the official reason given was a technical snag in the naptha cracker unit.

Haldia Petrochem was the major customer of IOC's Haldia refinery buying over one lakh tonne of naphtha every month when the plant was running at its full capacity. "We were supplying almost our entire production to HPL when the plant was running, this helped in saving logistic and transport costs, which is not the case now," said a source in IOC's Haldia plant.

" HPL is not taking any more naphtha, but whatever we are producing is being consumed by various others sources. We are now sending around 10,000 to 12,000 MT of naphtha per month to our refinery in Panipat and other sources," IOC executive director Y K Gupta had told reporters.

But sources said that availability of railway rakes was proving to be a major hindrance in sending naphtha to Panipat. "Availability of rakes is a huge problem as one rake has a maximum capacity of carrying around 2,000 tonnes of naphtha, so to transport 12,000 tonnes we have to bear the cost of six railway rakes," the person quoted above said..

Experts say that without a backward integration it is difficult for a standalone refinery to maintain functions.

However IOC officials expect that with the commissioning of a petrochemical complex in Paradeep, the logistic costs will improve for the Haldia plant as it can supply its production to the Paradeep refinery. Y K Gupta had told reporters that the Paradip petrochemical complex is also would be commissioned by early March.

By then HPL is also expected to resume operations as lenders have agreed to infuse fresh funds after Purnendu Chatterjee, chairman of The Chatterjee Group (TCG), agreed to invest Rs 100 crore as margin amount into the ailing plant. TCG is slated to assume management control of HPL after had agreed to buy 520 million shares (30.8% of the equity) of the state government at Rs 25.10 each, matching the price offered by Indian Oil Corporation after the government invited an Expression of Interest last year