The capacity of Kochi Refinery is being expanded from the current 9.5 million tonnes to 15.5 million tonnes a year

The Union Fertilizer Ministry is exploring the possibility of merging the Kochi unit of Hindustan Organic Chemicals Ltd. (HOCL) with Kochi Refinery, a unit of Bharat Petroleum Corporation Ltd. (BPCL).

Sources said the first step was to find out whether the Petroleum Ministry would be amenable to a merger in view of the new projects lined up for Kochi Refinery and considering the benefits that would accrue to the merged entity.

The capacity of Kochi Refinery is being expanded from the current 9.5 million tonnes to 15.5 million tonnes a year.

BPCL plans to establish a joint venture petrochemicals complex here. Once the petrochemicals complex is a reality, BPCL will emerge as a major challenger to HOCL in the petrochemicals derivatives market, especially in the case of phenol.

Besides, Kochi Refinery is already the key raw material supplier to the Kochi unit of HOCL, which employs more than 400 people. The Kochi unit has an installed capacity 40,000 tonnes of phenol a year.

The raw materials supplied by the refinery include LPG, LSHS and benzene. Merging HOCL unit with BPCL refinery would give the new entity an advantage over its competition, industry sources pointed out.

The Kochi unit of HOCL, commissioned in 1988, recorded a net profit of more than Rs.100 crore last year. It produces carbolic acid (phenol), acetone and hydrogen peroxide. According to sources, the unit will see a substantial dip in profit this year owing to the continuing world-wide economic recession and spiralling raw materials prices.

Sources said merging the two units of HOCL — one in Kochi and the other in Rasayani in Maharashtra — with what was then the stand-alone Kochi Refinery was mooted about a decade ago. However, the proposal was not accepted by the refinery, which was then interested only in considering the possibility of merging the Kochi unit.

Trade unions at HOCL are learnt to have submitted a memorandum to the Petroleum Ministry, seeking a merger of the HOCL unit with that of BPCL refinery.