Companies

HPCL recasts plan for Maharashtra refinery

Murali Gopalan Mumbai | Updated on January 20, 2011 Published on January 20, 2011

Targets 41 million tonne capacity by 2016





The Hindustan Petroleum Corporation has recast its plans for the Maharashtra refinery scheduled for commissioning near Chiplun (Ratnagiri district) post-2015.

Originally conceived as a 15 million tonne project at a capital outlay of Rs 30,000 crore, it will now kick off with a capacity of nine million tonnes.

“The idea is to get it off the ground by 2016 and then double capacity to 18 million tonnes. This expansion should ideally happen sometime by 2020,” Mr S. Roy Choudhury, Chairman and Managing Director of HPCL, told Business Line.

Contrary to common perception, the Maharashtra refinery will not replace the decades-old Mumbai refinery nestled in the heart of the city. “Both will be integral to HPCL in the years to come,” he added.

Capacity

The oil major's present refining capacity is 14 mt which is nearly evenly balanced between Mumbai and Visakhapatnam. Vizag's capacity will be increased by another 9 mt to 15.5 mt. The Bhatinda (to be commissioned in a few months) and Maharashtra refineries will also be up and running with 9 mt each.

Since Mumbai's land is locked for expansion, its capacity will remain at 7.5 mt, though some debottlenecking could result in a marginal increase.

“We are targeting a total refining capacity of 41 million tonnes by 2016 which will be in perfect sync with the estimated market demand for our products. At present, there is a shortfall of nearly 45 per cent because we only have two refineries,” Mr Roy Choudhury, said.

Investment

HPCL has earmarked Rs 50,000 crore for the next five years which will go into these new refineries and the Vizag expansion. In addition, investments will be needed for supporting infrastructure like terminals, pipelines, bottling plants and retail outlets.

By 2020, the company's refining capacity is estimated to be closer to 60 million tonnes once Bhatinda and Maharashtra double to 18 million tonnes each. This will again ensure an even supply-demand balance which is expected to hold HPCL in good stead for the future.

The Maharashtra refinery may not have been needed, sources say, had HPCL not handed over Mangalore Refinery & Petrochemicals ‘literally on a platter' to the Oil and Natural Gas Corporation. “It was the best bet for the West Coast,” they add.

Petrochemicals

While the downstream sector will be top priority, HPCL is also keen on pursuing opportunities in exploration and production, as well as in gas distribution. Petrochemicals will be back on the radar with the revival of the Vizag plan which was put on hold following the global slowdown.

The biggest worry, though, continues to be the timely generation of cash. Like its other two refining counterparts, HPCL has had to constantly walk the tightrope when it comes to getting an adequate compensation package for losses incurred on diesel, cooking gas and kerosene.

For a company that needs Rs 50,000 crore for the next five years, this is not exactly a pretty picture.

Published on January 20, 2011
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