The Hindu Business Line : Chennai Petro pipeline to cost Rs 700 cr instead of Rs 65 cr

Chennai, July 27 Circumstances have forced Chennai Petroleum Corporation Ltd (CPCL) to abandon a Rs 65.4-crore project and think of a Rs 700-crore alternative.

Crude oil for CPCL’s 9.5-million-tonne refinery at Manali, north Chennai, needs to be brought to the Chennai port and piped down to the refinery.

Today, a decades-old, 30-inch pipeline connects Chennai Port to CPCL’s Manali refinery, in north Chennai. For over three years now, CPCL has been planning to replace the pipeline with another 42-inch one.

Setback

When it was conceived, the cost of the project was estimated at Rs 65.4 crore. The project was “expected to be completed within 12 months after Right of Way, clear of encroachments, is made available by Chennai Port Trust in co-ordination with Tamil Nadu Road Development Corporation and National Highways Authority of India,” says CPCL’s annual report for 2006-07.

CPCL waited for long but the pipeline route was not cleared. There have, apparently, been difficulties in relocating the villagers there, mostly fishermen. In the meantime, the cost of the project also increased to around Rs 150 crore due to input cost escalation.

Alternative

CPCL is now mulling an alternative project that envisages putting up a single buoy mooring (SBM) some 200 m into the sea, a tank farm at the landfall point and a 22-km pipeline along a route that does not require relocation of inhabitants.

The cost of the project is estimated at Rs 700 crore. The SBM itself could cost around Rs 350 crore.

With the SBM in place, CPCL could buy crude in larger quantities and hence, cheaper, and also save in freight costs. (Actually, CPCL’s mother company, Indian Oil Corporation, buys the crude for CPCL.) Crude could be brought in Very Large Crude Carriers (VLCC) and offloaded at the SBM. (Indian ports are not deep enough to handle VLCCs.) The tank farm at the landfall point is necessary so that the offload is quicker.

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