Odisha, IOCL to ink MoU to fast track Rs 28,000-cr refinery

With the Rs 28,000-crore refinery project of Indian Oil Corporation Ltd (IOCL) at Paradip under a cloud of delay, the Odisha government has decided to ink an MoU (Memorandum of Understanding) with the oil marketing firm to stipulate timeline and milestones for commissioning of the project.

IOCL being the anchor tenant for the PCPIR hub (Petroleum, Chemical and Petrochemical Investment Region) to be set up in 70,214 acres of land spread over Jagatsinghpur and Kendrapara districts, the timely commissioning of the refinery was vital for attracting investors for the mega investment hub.

“We are soon going to have an MoU with IOCL for the refinery project as this will help us to fix milestones for ensuring commissioning of the project in a stipulated time-frame. The refinery is now expected to be completed by June 2013,” a top state official told Business Standard after a review meeting on the Odisha PCPIR project by Department of Industrial Policy & Promotion (DIPP) under Union ministry of commerce.

IOCL had said previously that it expected commissioning of its 15 million tonne per annum refinery project at Paradip by the middle of 2012.

The state government has visibly come under Central pressure to sign MoU with the anchor tenant of the PCPIR project. The Union ministry of chemicals & fertilizers had urged the state government to go for an MoU after the state raised concern over final commitment of the anchor tenant.

“In order to ensure a degree of certainty in the matter, it would be desirable for the state government to sign an MoU expeditiously with IOCL duly, outlining mutual commitments and corresponding timelines,” Neelkamal Darbari, joint secretary, Union ministry of chemicals & fertilizers said in a recent letter to Parag Gupta, secretary (industries department).

The PCPIR hub is expected to attract investments to the tune of Rs 2.74 lakh crore.

On its part, IOCL has clarified that it faced a daunting hurdle to commission the project on schedule. With sourcing of water from the Jobra barrage kicking off a row and reaching the High Court, the company said the issue took its toll on timely project execution.

Contesting the High Court order, IOCL has filed a special appeal in the Supreme Court, which on May 14 this year, has kept the impugned order in abeyance.

“IOCL is staring at a daunting time and financial hurdle with the potential to derail the entire economics of the project. The local law and order situation is pushing the project to the brink on many occasions. Political interests and unionization are stumbling blocks which cannot be wished away,” the company said in a release.

The company said construction activities at Paradip are in full swing with thousands of engineers, architects, designers, planners, contractors and labourers engaged at the project site. Construction work on the Rs 28,000 crore refinery is 81 per cent complete, IOCL claimed.

IOCL has been handed over 3,344.65 acres of land for the project. The refinery will produce 5.97 million tonnes of diesel, 3.4 million tonnes of petrol, 1.45 million tonnes of kerosene/ATF (Aviation Turbine Fuel), 536,000 tonnes of LPG, 124,000 tonnes of naphtha and 335,000 tonnes of sulphur, all of which will be for sale in the domestic market.