Mittal puts Vizag project on hold

Cites current slowdown for staying away from the JV.

UK-based billionaire LN Mittal's Mittal Energy Investments has decided to put on hold its investment in the proposed Rs 50,000-crore joint venture refinery project at Visakhapatnam, Hindustan Petroleum Corp (HPCL) Chairman Arun Balakrishnan said today.

The project is being planned by a five-way joint venture involving HPCL, French oil major Total SA, Mittal Energy, Oil India and GAIL (India).

The integrated project will include a 15-million-tonne-per-year refinery along with a petrochemical unit.

"Mittals have said that they want to pause their investment in the project at the moment due to the current economic meltdown, and has asked us to go ahead with the project," Balakrishnan said today.

He, however, said that Mittal Energy will continue with its investments in the upcoming Rs 18,900-crore refinery project in Bathinda (Punjab).

HPCL and Mittal Energy have formed a joint venture —Guru Gobind Singh Refineries — for setting up the 9-million-tonne refinery, which is likely to be commissioned in early 2011.

"Total is very keen on the Vizag refinery project and we are likely to take a re-look at the project sometime in March," he said. The joint venture partners were earlier expected to finalise the project structure by this month.

"We hope that a clear picture on the global economic situation would emerge in the next few months that will help the joint venture to take a final investment decision by March on the project structure and configuration by March," Balakrishnan said.

These companies have completed the first round of pre-feasibility study for the project while the second round of pre-feasibility is currently on.

He said that the joint venture may decide to delay setting up the petrochemicals unit due to the slowing demand of polymers.

"Petrochemicals demand has slowed down due to the slump in the automobile and real estate sector, which are major consumers of polypropylene," Balakrishnan said.

The refinery will initially be export-oriented, but could supply some products to the Indian market in the long run.