Indian Oil Corp-oration (IOC) will focus on low-cost expansion of refineries and pipelines to compete in the deregulated hydrocarbon sector, the companys chairman said on Sunday.
To be competitive, we have to sharpen our edges. We are expanding and upgrading our refineries and pipelines, improving distillate yields through de-bottlenecking, and taking stringent steps to cut expenses further, IOC chairman M A Pathan told Reuters in an interview. IOC has six refineries accounting for 25.70 million tonne of refining capacity or 42 per cent of the countrys total capacity of 61.55 million tonne.
The companys seventh refinery in Panipat, which has a capacity of six million tonne, started test runs earlier this month.
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Pathan said IOCs future plans included expanding the refining capacity of its units at Barauni, Koyali and Panipat, upgrading lubricant producing facilities at the Haldia refinery, and increasing capacity of the Kandla-Bhatinda product pipeline. Our focus will be cost-effectiveness, Pathan said. The pipeline from Kandla to Bhatinda is the countrys only product pipeline with transporting capacity of six million tonne per annum. IOC plans to invest Rs 30,600 crore during the Ninth Plan, said Pathan. Of this, 42.7 per cent would be spent in the refining sector, 16.5 per cent in pipelines, 34.4 per cent in marketing, and the remainder for other activities including crude oil exploration and production, he said.
Pathan said IOCs profits would not be adversely affected in the decontrolled scenario. I dont think they (profits) will be lower than the administered price mechanism (APM) level.
IOC reported a net profit of Rs 904 crore in the first half of 1997-98 compared with Rs 844 crore in the same period a year earlier. (Reuters)
From April 1, prices of all products except petrol, kerosene, aviation fuel, diesel and LPG have been decontrolled, and ex-refinery prices are being fixed at import parity levels.
Pathan said IOC was negotiating marketing rights for products from the upcoming refineries of Reliance Petroleum Ltd and Essar Oil Ltd to increase its marketshare. We had negotiated marketing arrangements in the APM era. We are now working out tie-ups in the post-APM era.
Pathan said the sanctions imposed by the US and Japan, following Indias nuclear tests, would not affect IOCs projects since they were being financed through internal resources or external commercial borrowings (ECBs).
The ECBs are not government aided loans. They are dealt purely on commercial terms. If one consortium backs out, there will be another to take its place, he said.