State-run Hindustan Petroleum Corp. plans to invest Rs. 25,000 crore in setting up a 15 million tonnes a year refinery on the west coast.

The new refinery may be located anywhere between Mumbai and Goa on the coast and is being mulled to make up for space constraint that its Mumbai refinery faces at present.

“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 fell in 5-10 years, the space constraint will made the inefficient,” a top company official said.

HPCL, which has a 7.5 million tonnes a year unit at Vizag in Andhra Pradesh and is building a 9 million tonnes plant at Bhatinda in Punjab in joint venture with steel czar Lakshmi Mittal, is contemplating a refinery of the size of 10, 15 or 20 million tonnes a year.

“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,” the official said.

The planned refinery would be like an extension of the existing Mumbai unit.

“We have sounded Maharashtra government for 2,500-3,000 acres of land for the project,” the official said.

When contacted, HPCL Chairman Arun Balakrishnan confirmed that the company was studying possibility of a new refinery on the west coast but refused to elaborate.

The official said the refinery may be located in Raigad or Ratnagiri districts of Maharashtra and if land was not available, the company may think of going to Gujarat.

The project may be funded in a debt-equity ratio of 2:1 or 2.5:1, the official said, adding the refinery would mostly meet domestic demand. “The investment decision would depend on the feasibility report and the fiscal incentives that we get from the state government.”

The new refinery project comes on the heels of HPCL being forced to put on back-burner a USD 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 explorer Oil India Ltd and gas utility GAIL India as partner.

About 2,500 acres land near HPCL’s existing 7.5 million tonnes refinery at Vizag has been acquired for the project.

But project was deferred after the pull-outs.

The official said the Bhatinda project was on schedule for completion next year.