Refinery land entwined in bureaucratic red tape

Almost two years after the state-run Hindustan Petroleum Corporation Ltd (HPCL) decided to build a new refinery in Maharashtra, the company has not yet been able to find suitable land in the state because of bureaucratic delays.

The company needs 3,000 acres of land. It had earlier decided to set up a refinery at Lote Parshuram in Chiplun in Ratnagiri district on 2,800 hectares, but has now sought land at Chausal in the same district.

“If seeking land from the state government is taking two years, it is anyone’s guess when the new refinery will take shape,” a senior HPCL executive told Business Standard.

HPCL wants to build a new refinery with an investment of Rs 30,000 crore. Its Mumbai refinery with a capacity of nine to 15 million tonne per annum (mtpa) is too old to be modernised despite facing space constraint. The company executive said normally a refinery of this size is usually spread over 2,000 acres, but HPCL’s existing refinery is on 350 acres.

Engineers India Ltd has already prepared a detailed feasibility report for the new refinery. HPCL has two refineries, one each in Mumbai and Visakhapatnam, with capacities of 6.5 mtpa and 8.3 mtpa, respectively.

HPCL is also building a nine-million tonne plant at Bhatinda in Punjab under a joint venture with L N Mittal. The project is on schedule for mechanical completion before March 2012.

For the new refinery, the state government is insisting that there should be no displacement of people.

The rate at which the land is to be acquired will be decided after taking into account the ready reckoner rate primarily used to calculate the market value of flats for stamp duty and registration charges.

HPCL had earlier said it might turn its Mumbai refinery into a national lubricant blending facility after a new refinery at Ratnagiri.

HPCL’s Mumbai refinery has the highest lubricant production capacity in India and is spread over 350 acres. The two refineries together upgrade crude petroleum into many value-added products and 300 grades of lubricants, specialities and greases.

The company will fund the refinery project partly through internal resources of Rs 11,000 crore and Rs 10,000 crore of loans. After environment clearance, the refinery is expected to be ready in about four years, CMD Subir Roy Choudhury had said earlier.