Bid & Tender
HPCL’s Two Refineries Stuck in Red Tape

Date : Sep 14, 2015

The United Progressive Alliance (UPA) Chairperson Sonia Gandhi laid the foundation stone for Hindustan Petroleum Corporation Limited’s (HPCL’s) refinery and petrochemical complex at Pachpadra in Barmer district was laid two years ago. Two years down the line, the company is still struggling to get the project off the ground.

 

Before the Rajasthan refinery project, HPCL in 2010 had decided to set up a 9 million ton refinery in Maharashtra’s Ratnagiri district but the region was declared ecologically sensitive, putting the plan in jeopardy.

 

The moratorium for the Maharashtra project was up to 2014. A year after it elapsed, the company says it has no clue about the future of the project. The Madhav Gadgil panel had termed the entire Western Ghats an ecologically sensitive area and suggested “no new dams based on large-scale storage be permitted and no new polluting industries, including coal-based power plants, be allowed”. It had classified 142 taluks in the Western Ghats into three ecologically sensitive zones.

 

Getting Off the Ground

 

The foundation stone for HPCL’s refinery and petrochemical complex at Pachpadra in Barmer district was laid two years ago. However, the project is caught in the red tape and work is yet to start on the new refinery.

 

The refinery-cum-petrochemical complex was to be set at a cost of Rs 372.30 billion and the refinery was to start production by 2017-18. The refinery was to process 4.5 million tons of Mangala crude and 4.5 million metric of Arab or other crude oil.

 

“It’s an irony that we are a refining company struggling to set up a refinery. It is good to hear about the Make in India campaign and the grand vision that the government has. But nothing seems to be moving. Refineries are completed in five year.

 

We have our plans ready. And the governments are busy playing the blame game,” said a senior HPCL executive. The Rajasthan government under Ashok Gehlot had promised HPCL would be given Rs 37.36 billion every year for 15 years as an interest-free loan, an Rs 560 billion commitment to the project. “This was later termed as a loss to the state by the BJP government. They are still deciding on the terms,” said an HPCL executive.

 

The refinery-cum-petrochemical complex was to be set at a cost of Rs 372.30 billion and the refinery was to start production by 2017-18. The refinery was to process 4.5 million metric tons of Mangala crude and 4.5 million metric tons of Arab or other crude oil. The refinery was to have a capacity of 9 million metric tons, generate Rs 8780 billion in income, and provide employment to 140,000 people.

 

This week Minister of State for Petroleum Dharmendra Pradhan said the Congress government in the Rajasthan had taken the decision in haste before the assembly elections. "The refinery will be set up by HPCL in Rajasthan. We are working on a scheme because we want the refinery to be profitable. The previous government ignored the interests of the state while finalising the project," he said.

 

Nishi Vasudeva, chairman and managing director, HPCL said, “It is a question of when you are able to get the approvals. The Ratnagiri project would have gone ahead had it not been for the environmental ban. These are circumstantial things.” HPCL has one refinery each in Visakhapatnam in Andhra Pradesh and Bathinda in Punjab, with capacities of 8.3 million tons and 9 million tons, respectively. The Bathinda refinery was set up at a cost of Rs 215 billion in a joint venture with steel magnate LN Mittal. The refinery’s capacity is slated to be increased to 18 million tons.