The Hindu Business Line : ONGC may be told to rethink Kakinada refinery project

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New Delhi Feb. 21 ONGC may be compelled to reconsider the decision to shelve its plans to build a greenfield refinery project in Kakinada, Andhra Pradesh. The Union Petroleum Minister, Mr Murli Deora, said that he is going to hold a meeting with ONGC officials wherein he is going to ask them to reconsider their decision.

Speaking to newspersons here today, Mr Deora said, the Prime Minister, Dr Manmohan Singh, was very keen that the company must meet its commitment to build a refinery in that State. The Andhra Pradesh Government has been time and again holding talks with the Centre on the reported move by the ONGC to put its plans on the proposed project in Kakinada on hold.

Preliminary Study

The Chief Minister of Andhra Pradesh, Dr Y.S. Rajasekhara Reddy, has taken up the matter with the Prime Minister as well as the Petroleum Minister. ONGC had decided to defer its plans to invest in Kakinada Special Economic Zone and to develop an export-oriented refinery in Kakinada as preliminary reports about the feasibility of the project were not optimistic.

As per the preliminary study, the refinery size should be at least 15 million tonnes (mt) to make it viable, whereas the original proposal was for a 7.5-mt per annum refinery with an investment of over Rs 7,500 crore.

ONGC, along with its subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL), had inked two separate MoUs with the State Government and infrastructure lender during September last year. The first MoU was signed between the Andhra Pradesh Government, Infrastructure Leasing & Financial Services Ltd (IL&FS) and Kakinada Seaports Ltd (KSPL) to promote the Kakinada SEZ through a special purpose vehicle called Kakinada Special Economic Zone Ltd.

The second related to setting up of an export-oriented refinery through a joint venture of ONGC-MRPL, the Andhra Pradesh Government and IL&FS.

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