Even as two mega steel projects of the world’s second-richest Indian Laxmi Nivas Mittal have been facing hurdles in the country for several years, the nine-million-tonne Guru Gobind Singh Refinery — a project of his company’s joint venture with HPCL — has started operations. The Rs 21,500-crore refinery, built in record 42 months, is his company’s first greenfield project in India.
With the commissioning of the refinery, Mittal’s ArcelorMittal has joined the ranks of the country’s private sector refiners Reliance Industries Ltd and Essar Oil. Guru Gobind Singh Refinery, set up under an equal joint venture between Mittal Energy and Hindustan Petroleum Corporation in Bathinda, has taken India’s refinery capacity to 213 million tonnes.
The refinery would cater to the inland petroleum demand in Punjab, Jammu & Kashmir, Uttar Pradesh, Uttarakhand, Harynana, Rajasthan and Delhi. It will also help cut down on the cost of transporting products from faraway refineries to Northern India. HPCL, which currently depends on other refiners like Reliance Industries and Essar, will now directly source products from the refinery in Bathinda.
At the formal launch, Mittal said the refinery’s capacity would go up to 18 mt in future. This could help boost India’s exports and open fuel sales to Pakistan. After removing non-tariff barriers in November last year, Pakistan has allowed the import of fuels, including petrol and diesel, from India. The distance between Bathinda and Lahore is about 160 km.
The government had approved the joint venture between HPCL and Mittal Energy Investment Pte Ltd, formally known as HMEL, in July 2007. Both Mittal Energy and HPCL hold 49 per cent stake each in the JV, while the rest is held by SBI Caps. The refinery’s construction work began in mid-2008 and it was commissioned in February 2012. The project has been financed by a consortium of Indian banks, led by State Bank of India.
This is the second Indian refinery to be set up under the public-private partnership model. The six-million-tonne Bina refinery, the first public-private project with BPCL (74 per cent) and Oman Oil Company (26 per cent) as partners, was commissioned last year. Both Bathinda and Bina have secured seven-year tax holidays under a government scheme by commissioning the respective projects before March 31, 2012. Union Petroleum Minister S Jaipal Reddy said the two successful JV refineries bore testimony to the rising interest in the country’s refining sector.
The Bathinda refinery has high Nelson Complexity Index, which will enable it to maximise value-added products even from heavy/sour crude oil. The crude oil for the refinery, imported from abroad, is to be ferried through a 1,014-km pipeline from Mundra in Gujarat.
Besides the refinery, HMEL has also diversified into upstream oil and gas exploration. The JV has participating interests in three blocks in the country.
