Chennai Petroleum Corporation Limited (CPCL) is resting its hopes on Central Pollution Control Board’s (CPCB) latest report on Manali, and the consequent decision Union Ministry of Environment and Forests takes on new projects in the industrial belt north of Chennai for pursuing expansion programmes starting with a residue upgradation project.

The findings of the reassessment study by the southern region office of CPCB would be significant as the Ministry had imposed a moratorium on new projects in the industrial zone almost two years ago.

Besides the residue upgradation, CPCL is considering a six million-tonne expansion. The re-assessment of the Cumulative Environment Pollution Index — pertaining to effluents, air and solid waste — followed an appeal, and improvement measures initiated by the units in Manali.

“The CPCB study report is ready and is likely to be submitted to the Ministry shortly,” CPCL Managing Director A. S. Basu said here on Tuesday.

Explaining that the company would like to take more time to study the refinery expansion as there was excess refining capacity in the country, Mr. Basu, who took charge last month, said the residue upgradation programme, however, was important as CPCL stood to gain more in terms of distillate yield and gross refining margin (GRM).

The project schedule, according to Director (Technical) T. S. Ramachandran, would be 30 months.

Director (Finance) D. Lilly said the project, expected to cost Rs.3,100 crore, would help improve GRM by $1-2 a barrel.

The company is banking on internal resources to fund the project and nearly half of the Rs.730 crore capital expenditure proposed this fiscal had been set aside for the project.

On the first quarter performance, which saw CPCL posting a loss of around Rs.970 crore, Mr. Basu said it was on account of volatility in the oil market, the system of product pricing, “inventory levels that we are expected to carry” and rupee depreciation. Internally, many measures were being taken to improve the bottom line, including maximising the yield of distillates and reduction of fuel and loss and the operating cost.