BUSINESS

Jamnagar set to become global refinery hub



Indrani Dutta

Reliance Petro project to cost Rs. 27,000 crore

JAMNAGAR (GUJARAT): The arid town of Jamnagar, some 400 km from Ahmedabad, is set to become the refinery hub of the world after the completion of the brownfield expansion of the existing refinery here by December 2008.

The project is being implemented by Reliance Industries Ltd. (RIL) for its start up venture Reliance Petroleum Ltd (RPL) a 100 per cent subsidiary. Sources said the proposed refinery and polypropylene plant would be located in a Special Economic Zone (SEZ) adjacent to the RIL's existing refinery and the petrochemicals complex. RIL was planning to tap the capital market to fund the project. Post-issue, RIL would have a 80 per cent ownership of RPL. The requisite papers for the Initial Public Offering (IPO) were filed with the Securities and Exchange Board of India on March 6.

The sources said that while the existing refinery of 33 million tonnes capacity made Jamnagar the world's third largest single location refinery, the expansion would catapult the RIL-RPL combine into the world's largest single location refinery league. At present, the existing project exports 45 per cent of its output of petroleum products and 32 per cent of its chemical products like benzene. "The first project made India self-sufficient in petroproducts, this project will transform it from a net importer to a net exporter of petroleum products,'' the sources said, adding that the target markets were Europe, the U.S. and the Far East. The existing project had a refinery complex, a petrochemical facility, power utilities and port facilities (it is the world's second largest oil port).

The new refinery will have a distillation capacity of about 580 kilo barrels per stream day. The polypropylene plant will have a capacity to produce nine lakh tonnes annually. The project was initially contemplated to be set up by RIL, but subsequently it was decided to implement the project through RPL.

The capital cost of the project is estimated at Rs. 27,000 crore (about $6 billion). The debt component is likely to be about Rs. 15,750 crore (about $3.5 billion) and equity Rs. 11,250 crore (about $2.5 billion), including proceeds from the IPO.