Feasibility study on refinery project doubtful

Santosh Patnaik

Global meltdown and drop in petroleum prices create difference of opinion among partners

Mittal Energy, one of consortium members, decides to put on hold its investment plan

The $10 billion project is proposed to be part of the prestigious PCPIR

VISAKHAPATNAM: A decision is likely in April or May on whether to go ahead with conducting a detailed feasibility study on the $10 billion refinery and petrochemical complex near Visakhapatnam.

The global slump and drop in petroleum prices has created difference of opinion among the five-way partners of the mega project proposed at Achyutapuram, with public sector oil giant Hindustan Petroleum Corporation Limited as the major partner. Other members of the consortium are Gas Authority of India Limited, Total SA of France, Oil India and Mittal Energy Investments Pvt. Ltd. After steel tycoon Lakshmi Mittal suffered heavy losses due to global meltdown, Mittal Energy, which promised to become a major partner in the project, has kept on hold its plan for investment.

The pre-feasibility report conducted by GAIL and others has been favourable for setting up the refinery and petrochemical complex. However, the change in market conditions and the decision by Mittals to keep its decision to invest under suspended animation have slowed down the enthusiasm over implementation of the refinery project.

Sources say there is split of opinion among the partners of the consortium of the project. While some want burying the project under cold storage due to steep fall in crude price, others consider it as an appropriate time as the raw material and construction cost will be less at this juncture due to slump in crude, steel and cement prices.

Site earmarked

The State Government has already requested the Centre to help provide a provision for external infrastructure linkages for the mega project, which will form part of the ambitious Petrol, Chemical, Petrochemical Investment Region (PCPIR), coming up in the coastal areas between Visakhapatnam and Kakinada.

AP Industrial Infrastructure Corporation (APIIC) Executive Director and Chief Engineer K.V.V. Sathi Reddi said the site had been earmarked for the mega project and hoped that it would be launched soon.

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