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ONGC to invest Rs 20,000 cr in AP

BS Reporter  |  New Delhi 

Oil and Natural Gas Corporation (ONGC) will seek concessions from the Andhra Pradesh government for setting up a 15 million tonne a year (mtpa) refinery at Kakinada. The company plans to invest Rs 19,000-20,000 crore in the refinery.
ONGC Chairman and Managing Director R S Sharma said a special purpose vehicle (SPV) - Kakinada Refinery and Petrochemicals Ltd (KRPL) - for executing the refinery has been formed in which Mangalore Refinery and Petrochemicals (MRPL) holds 46 per cent stake, Andhra Pradesh Industrial Development Corporation 3 per cent, with the remaining held by IL&FS, and other financial institutions.
"The SPV will go for an initial public offering to raise funds for the project in a couple of years," Sharma said.
ONGC, the country's most profitable company, has appointed Engineers India Ltd (EIL) to carry out a feasibility study for the refinery.
The refinery, currently promoted by MRPL, is proposed to be taken on the books of ONGC since the balance sheet of MRPL is not strong enough to finance the project, Sharma said.
The exploration company had earlier proposed to set up a 7.5 mtpa refinery at Kakinada, which was found economically unviable by EIL at that capacity. However, the Andhra Pradesh government had subsequently raised the issue with Prime Minister Manmohan Singh, who had asked ONGC to again take up the refinery project.
"A 15 mtpa refinery does look feasible. The refinery will process imported crude oil and export the products. Anyone can set up such a refinery. However, since we had earlier planned to set up the refinery, we have been asked to go ahead with it," said a senior ONGC official, who did not want to be named.
EIL is expected to submit its feasibility report on the 15 mtpa refinery in June.

First Published: Tue, April 17 2007. 00:00 IST