HPCL mulls green-field refinery at Visakhapatnam

Hindustan Petroleum Corporation Limited (HPCL) has approached the state government to allocate about 2,500 acres of land in the proposed Andhra Pradesh Special Economic Zone (APSEZ) as part of its expansion plans at Vizag.

According to a communication sent by the public sector oil company to B P Acharya, managing director of Andhra Pradesh Industrial Infrastructure Corporation (APIIC), the nodal agency of APSEZ, HPCL is planning to set up an export-oriented green-field refinery-cum-petro-chemical complex at Visakhapatnam.

Government sources said that the company has indicated to invest anywhere between Rs 6,500 crore and 8,000 crore in the proposed project, including a refinery with about five million tonnes capacity.

The project is also expected to have a naphtha cracking unit. Around Rs 2,000 crore investment is required to create a one-million tonne green-field refinery plant. At present, the company has a 7.5-million tonne capacity refinery at Vizag.

The company zeroed in on the location in the proposed SEZ after it found that the land within and adjacent to its present facility in Vizag proved to be inadequate to meet the expansion requirements. HPCL officials had visited SEZ site and found it suitable for the purpose.

According to sources, things started moving in this direction after chief minister Y S Rajasekhara Reddy's discussions with the Union petroleum minister Mani Shankar Aiyar recently.

"We need to relook at our strategy in attracting investments to the state. As was done in the past, we now also want to focus on investments from public sector, including Navratnas," a senior official in the government told Business Standard.

It may be recalled that the Oil and Natural Gas Corporation (ONGC) recently made a similar announcement on its proposal to set up a refinery with 6 million tonnes capacity at an estimated investment of about Rs 5,500 crore at Kakinada where an SEZ has been planned to be jointly developed by ONGC and Kakinada Seaports Private Limited (KSPL), which runs the port.

The state government recently announced that Dubai-based Jebel Ali Port will be roped in as its strategic partner to develop the proposed APSEZ near Vizag. APIIC has already acquired over 7,000 acres of land.

The SEZ was originally envisaged to develop in over 9,200 acres area. Several companies, including Pilkington, Kapcol, KVK Nilachal, Kineta Met Coke Industries, Shriram EPC Limited have already approached APIIC for allotment of land in the SEZ.