Ministry Favours Mrl, Crl Expansion

The ministry of petroleum and natural gas has decided to push expansion projects of both Madras Refineries Limited (MRL) and Cochin Refineries Limited (CRL) to help overcome refining deficit in southern states.

The ministry is ready with a Cabinet note recommending a 3 million tonnes per annum (MMTPA) expansion of MRL and a 6 million tonnes per annum expansion of CRL. After expansion, MRL will have a capacity of 9 million tonnes per annum and CRL 13.5 million tonnes per annum.

The MRL expansion project is expected to cost Rs 2,400 crore and the CRL expansion would cost Rs 4,500 crore.

 

The Petroleum ministry's recommendations are expected to be placed before the Cabinet Committee on Economic Affairs (CCEA) shortly for approval.

MRL is a 6-MMTPA stand-alone refinery with a paid up capital of Rs 197 crore, of which the government shareholding accounts for 52.5 per cent, National Iranian Oil Company 14.3 per cent, public 8.5 per cent, and the remaining is held by financial institutions and mutual funds.

CRL is also a stand-alone refinery with a capacity of 7.5 MMTPA. The Union government owns 55.04 per cent of the equity, the Kerala government 5.08 per cent, public 9.53 per cent and financial institutions and employees 30.35 per cent.

The paid-up capital of CRL is Rs 68.94 crore.

The petroleum ministry's decision came after prolonged negotiations on the basic issue of expansion of existing refineries versus putting up new grassroot refineries.

While a section of the ministry wanted the government to go in for the cheaper option of expansion projects, since these cost less than half the grassroot refineries, another prominent section in the petroleum ministry expressed the view that the new grassroot refineries help develop underdeveloped areas and generate employment opportunities in newer areas.

In fact, even former petroleum minister V K Ramamurthy is understood to be of the opinion that instead of going in for the expansion of Cochin and Madras refineries, the government should encourage the putting up a grassroot refinery at Nagapattinam.

The nine-million-tonne Nagapattinam refinery is proposed to be put up by Indian Oil Corporation (IOC) in association with MRL and Petronas of Malaysia.