State-run Hindustan Petroleum Corporation Limited (HPCL) plans to invest about Rs. 15,000 crore in setting up a nine million tonnes-a-year refinery on the west coast.
The new refinery, which may be in Raigad district of Maharashtra, is being mulled to make up for space constraint that its Mumbai refinery faces at present.
“We have been shown three pieces of land by Maharashtra government ... We should be able to finalise the location in next few weeks,” a company official said.
HPCL wants to build a nine million tonnes unit and then double it later.
“We should be able to finalise location and size of the refinery in three to four months,” he said. “A consultant for doing detailed feasibility report (DFR) will be appointed soon.”
The land offered for the refinery is located between Ratnagiri and Raigad districts. The unit, called Maharashtra Refinery, would be completed in 48 months from the date of receiving all approvals, he said.
“We face tremendous space constraint at our 6.5 million tonnes-a-year Mumbai refinery. A refinery of this size is spread over 2,000 acres of land but our refinery is spaced in just 350 acres. We feel in five to ten years, the space constraint will make the unit inefficient,” the official said. He said the Mumbai refinery may eventually be shut down once the new refinery is built. “That decision we need to take in six to seven years.”
HPCL has a 7.5 million tonnes-a-year unit at Vizag in Andhra Pradesh and is also building a nine million tonnes plant at Bhatinda in Punjab in joint venture with steel czar Lakshmi Mittal.
“We are commissioning a feasibility study which we expect will be completed in six months. Investment decision will be made based on the feasibility study,” he said.
“We have sounded Maharashtra government for 2,500-3,000 acres of land for the project,” he said.
The project may be funded in a debt equity ratio of 2:1 or 2.5:1.
The new refinery project comes on the heels of HPCL being forced to put on backburner a $10 billion refinery-cum-petrochemical project at Vizag after Mittal and French oil major Total SA pulled out. The only-for-exports 14 million tonnes-a-year refinery was being planned to target South East Asia and the Middle East. Besides HPCL, Mittal and Total, the project also had Oil India Ltd and gas utility GAIL India as partner.
About 2,500 acres of land near HPCL’s existing refinery at Vizag had been acquired for the project, which was deferred after the pull-outs.