The Hindu Business Line : Kochi Refineries' SPM project hit by strike

EVEN as Kochi Refineries Ltd (KRL) is in the process of awarding major contracts for the single point mooring (SPM) and laying pipelines, the construction at Puthuvypeen near here has come to a halt after the head-load workers went on a strike demanding high wages.

Work at the site, including the construction of storage tank farm (STF) on 70 hectares at a total cost of Rs 40 crore, was awarded to a Mumbai-based company, which had started executing the project.

The ratio of workers to be drawn from different trade unions such as CTTU, INTUC, CITU, AITUC and BMS for employing at the construction site had been finalised, a senior KRL official told Business Line.

He said that now the head-load workers were on a strike for the past two days demanding higher wages. They are demanding Rs 5.50 for unloading a bag of cement "which is exorbitantly high" as in Kochi city the rate was Rs 3.50 a bag, he said. The issue is being discussed with the trade unions, he said.

Meanwhile, he said the bid for the SPM had been finalised and the work would be awarded before January 10. A US company is expected to bag the contract, as it is a specialised job and the majority of the bidders were from the US, he pointed out.

The bids for laying the pipeline are yet to be opened and after opening it, a bidders' meeting would be called, he said adding, however, that this work would also be awarded by January-end.

The Rs 623-crore SPM project has become inevitable for the refineries to reduce the cost on transportation of crude especially at a time when KRL is expanding its capacity from the present 7.5 million tonnes per annum (MTPA) to 9.5 MTPA, said Mr N. Nandakumar, General Manager (Projects).

KRL receives crude oil from Bombay High and from overseas at the crude oil terminal (COT) of the Cochin Port Trust by deploying limited capacity tankers up to 70,000 tonnes due to draft limitation at Kochi channel. This results in higher transportation costs to the refinery, especially when the crude is sourced from far off countries such as Nigeria.

By making use of very large crude carriers (VLCC), the cost of crude can be substantially reduced and it is estimated that the company would make a saving of around Rs 200 crore on transportation cost.

"To become globally competitive, it is essential that KRL makes use of this freight advantage by setting up crude oil receipt facilities (CRF) on its own," he said.

The proposed project consists of the following main facilities:

SPM, 19.4 km off Puthuvypeen lighthouse in the Arabian Sea for handling VLCCs of 3,00,000 tonne capacity; a submarine pipeline of 48" diameter to carry crude oil from the SPM to Shore Tank Farm (STF); STF for storage of 240,000 kilo-litres of crude at Puthuvypeen Coast before it is pumped to the KRL refinery at Ambalamugal; and a 30" Onshore Pipeline between the STF and KRL pipeline corridor over about 10 km including a backwater stretch of about 4 km.

The SPM, he said, is a floating buoy anchored at a depth of 30 metres for mooring large tankers and receiving crude through floating hoses, under buoy hoses and the 48" submarine pipeline to the shore tanks. The targeted completion of the project is by May 2007, he said.