Oil Ministry’s ₹2.7-lakh-cr refinery remains on paper

The Oil Ministry’s grand plans to set up a ₹2.7-lakh-crore-plus refinery and petrochemical complex in Ratnagiri, Maharashtra, is stuck to the drawing board, seven years after it was conceptualised.

An RTI filed by BusinessLine with Indian Oil Corporation Ltd has revealed that a detailed project report (DPR) for the mega project is yet to be prepared, and only a pre-feasibility study is in place. A DPR is the very core of an industrial project, and captures all the major financial and technical details.

The proposal for a coastal refinery has been under discussion in the Oil Ministry for the past seven years. In 2010, oil marketing major Hindustan Petroleum Corporation Ltd (HPCL) took the the initiative to set up the refinery, but it ran into land acquisition issues. When the Modi government came to power in 2014, the scope, capacity and investments of the coastal refinery were further expanded.

In December 2015, at an industry event in Mumbai, Union Minister for Petroleum and Natural Gas Dharmendra Pradhan announced plans for a mega refinery.

The project for a 60 million tonnes per annum (mtpa) integrated refinery-cum-petrochemical complex, planned at Babulwadi village in coastal Ratnagiri district, is to be jointly executed by IOCL, HPCL and Bharat Petroleum Corporation Ltd. IOCL is the lead project manager.

However, a number of crucial questions remain unanswered, the most important being the criteria based on which the site was selected. Babulwadi village is just 15 km away from Madban village, the primary site for the Jaitapur nuclear power project.

A pre-feasibility study, prepared by Engineers India Ltd for IOCL, shows that refinery throughput for the first phase is 40 mtpa, which will be expanded to 60 mtpa. The study gave no time-lines for achieving these milestones.

For the configuration study of the refinery, Basrah light and heavy, Castilla and Oman export have been cited as representative crude oils. The refinery will remain on stream for 8,000 hours out of 8,760 hours in a year.

The fuel products shall comply with BS-VI specifications, while the aromatics and petrochemical products shall be industrial/polymer grade.

The unloading crude from VLCC ships is being considered at JSW’s Jaigarh port, which has an 18.5-metres draught. Crude could be transported through a sub-sea pipeline (120-150 km) to the refinery. About one-third of the total crude demand for the project (20 mtpa) could be handled by the port.

IOCL, in an e-mail statement to BusinessLine , said that in line with international practice, it is mandatory to carry out a proper market study first. It is being carried out currently before proceeding with the preparation of feasibility reports as well as DPR. The logistics of crude oil supply to the proposed complex is under study phase and has not yet been firmed up.

On the crucial issue of nuclear accident fallout, the statement only said that the environmental impact assessment study for the proposed complex will cover such issues.

It added that the consortium of IOCL, BPCL and HPCL identified the site in Ratnagiri in October 2016, and thereafter, the consortium agreement was signed in December 2016 to take the project forward. The process of land acquisition is under progress by the Maharashtra government.

JSW Infrastructure was not available for comments. E-mails sent to company officials remained unanswered.

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