Indian Oil Corporation (IOC’s) subsidiary Chennai Petroleum Corporation Ltd (CPCL) is planning to invest around Rs 760 crore during the current fiscal. Major portion of which will go towards the company’s Rs 3000 crore resid upgradation project, which is waiting for the clearance from environment Ministry.
A S Basu, managing director, CPCL said that 50 per cent of the Rs 730-760 crore would go for resid project and crude oil pipeline project connecting Chennai port with company’s refinery at Manali, north of Chennai.
He added, the resid project suppose to go on stream end of 2013, but it will be delayed. “From the time we get environment clearance, it will take 30 months to commission the project.”
The project will help the company to improve its gross refinery margin (GRM) by $1-2 per barrel, said D Lilly, director - finance, CPCL. Asked whether the delay will increase the cost of the project, Lilly said, “ escalation may not be their now since economic slow down still continues.” Meanwhile, Basu said that the company is the process of finalising its proposed brownfield capacity of around 6 million tonnes.
At present India got surplus refining capacity, while the production demand is 148 MT per annum, refining capacity in the country is 213 MT. With the surplus situation, we are now looking how the proposed brownfield expansion will be profitable. We are looking at the most optimum configuration”.
It may be the proposed 6 MT expansion, may required around Rs 12,000-13,000 crore investment. Lily added, funding for the expansion is not a constrain. The company got various modes to raise money including ECBs, syndicated and domestic loans and other modes.