Pratim Ranjan Bose
Kolkata. March 22
, Indian Oil Corporation's proposed mega entry into petrochemicals as early as November 2007 has apparently hit rough weather. According to information available, the naphtha cracker-cum-polymer project is set to witness a substantial cost and time overrun.
While the project cost may double from Rs 6,300 crore (as was indicated in the detailed feasibility report) to Rs 11,900 crore, the completion date is postponed to early 2009.
Company sources, however, confirm that problems notwithstanding, the project was on. On completion, the project will have capacity to manufacture 800,000 tonnes per annum (tpa) of ethylene; 5,75,000 tpa of propylene; 3,50,000 tpa low linear density poly ethylene (LLDPE); 300,000 tonnes of high density poly-ethylene (HDPE); 2 x 300,000 tonnes of poly propylene (PP) and 250,000 tonnes of mono-ethylene glycol (MEG).
According to sources, the time overrun was caused as bidders wanted 35 months to complete the project, instead of the 26 months as projected by IOC. Since the bidding process was already five months behind the schedule, the project will be delayed by at least 14 months.
More importantly, the financial bids for the naphtha cracker project, divided in 13 packages (including 11 peripheral and two main projects), had surpassed IOC's estimates. While hectic discussions are on between IOC and project management consultant Engineers India Ltd to reduce the project cost, sources blamed the lukewarm response from bidders and a rush for such petrochem projects globally for this unusual cost overrun.