State-run Hindustan Petroleum Corporation (HPCL) plans to invest Rs 30,000 crore to set up a 15-16 million tonnes-a-year refinery on the west coast.
The new refinery, which may be in Raigad district of Maharashtra, is being mulled to make up for space constraint that its Mumbai refinery faces at present.
"We have been shown three pieces of land by Maharashtra government... We should be able to finalise the location in next few weeks," HPCL Chairman and Managing Director Arun Balakrishnan told reporters here.
HPCL has got cost estimates done for the 15-16 million tonnes refinery, which would cost Rs 30,000 crore, and is currently extrapolating that for a 20 million tonnes-a-year unit.
"We should be able to finalise location and size of the refinery in 3-4 months," he said. "A consultant for doing detailed feasibility report (DFR) will be appointed in one month."
The land offered for the refinery is located between Ratnagiri and Raigad. The unit, called Maharashtra Refinery, would be completed in 48 months from the date of receiving all approvals, he said.
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"We face tremendous space constraint at our 6.5 million tonnes-a-year Mumbai refinery. A refinery of this size is spread over 2,000 acres of land but our refinery is spaced in just 350 acres. We feel in 5-10 years, the space constraint will make the unit inefficient," the official said.
Balakrishnan said the Mumbai refinery may eventually be shutdown once the new refinery is built. "That decision we need to take in 6-7 years."
HPCL, which has a 7.5 million tonnes-a-year unit at Vizag in Andhra Pradesh and is also building a 9 million tonnes plant at Bhatinda in Punjab in joint venture with steel czar Lakshmi Mittal, is contemplating a refinery of the size of 15 or 20 million tonnes-a-year.
"We are commissioning a feasibility study which we expect will be completed in six months. Investment decision will be made based on the feasibility study," he said.
"We have sounded Maharashtra government for 2,500-3,000 acres of land for the project," he said.
The project may be funded in a debt-equity ratio of 2:1 or 2.5:1.
The new refinery project comes on the heels of HPCL being forced to put on back-burner a $10 billion refinery-cum-petrochemical project at Vizag after Mittal and French oil major Total SA pulled out.
The only-for-exports 14 million tonnes-a-year refinery was being planned to target South East Asia and the Middle East.
Besides HPCL, Mittal and Total, the project also had Oil India and gas utility GAIL India as partner.
About 2,500 acres of land near HPCL's existing refinery at Vizag had been acquired for the project, which was deferred after the pullouts.
Balakrishnan said the Bhatinda project was on schedule for mechanical completion in March 2011. "Pre-commissioning activities will start in October/November this year and will be commissioned by June 2011," he said.
Bhatinda will cater to fuel demand in Punjab, Haryana, Delhi, UP and parts of Bihar. HPCL has almost completed a product pipeline to carry fuel from Bhatinda to Delhi from where it can be moved by train to entire UP and parts of Bihar.