The government has decided to divert 1.5 million tonnes of Ravva crude for use by the oil-starved Bongaigaon Refinery and Petrochemicals Ltd.
The Ravva crude, from Andhra Pradesh offshore, will be brought to Haldia port by tankers and then pumped to the 2.35 million tonnes per annum Bongaigaon Refinery through the Haldia-Barauni-Bongaigaon pipeline.
The decision was taken at a high-level meeting convened by petroleum secretary B K Chaturvedi here yesterday. The move will give a much needed relief to refineries in the Northeast, which have been incurring losses because of under-utilisation of their capacities.
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Bongaigaon Refinery has a paid-up capital of Rs 199.82 crore. It was incorporated in 1974. The viability of the company depends on the supply of crude and development of marketing capabilities. It receives crude produced in Assam, which is inadequate to meet the requirement in the Northeast.
Bongaigaon Refinery also suffers from a marketing disadvantage because it is located far away from the main market for petroleum and petrochemical products. The government has already turned down the proposal to integrate the four refineries in the Northeast -- Digboi, Guwahati, Bongaigaon and Numaligarh, with Oil India Ltd to improve their viability in the post-administered price mechanism period.
Of these refineries, Digboi and Guwahati are owned by Indian Oil Corporation (IOC), Bongaigaon is a subsidiary of IOC and Numaligarh is a subsidiary of Bharat Petroleum Corporation Ltd (BPCL). As against the overall installed capacity of 7 million tonnes per annum, the crude availability in the region is pegged at 5 million tonnes per annum.
Barring Numaligarh, the other refineries have been running losses. While Numaligarh registered a profit of Rs 123 crore during 2001-02, Digboi incurred a loss of Rs 19 crore, Guwahati Rs 92 crore, and Bongaigaon Rs 309 crore.
The Numaligarh refinery has been hit hard by the 2002-03 Budget, which had withdrawn 100 per cent excise duty exemption to it, and granted 50 per cent excise duty exemption to the refineries in the region.