HPCL may invest Rs 6000 cr to up Vizag refinery capacity

To create storage facility for another 5 lakh tonnes

State-owned Hindustan Petroleum Corporation Limited (HPCL) is studying the feasibility of pumping in between Rs 5,000 and Rs 6,000 crore to increase the capacity of its Vizag refinery to 15 million tonnes apart from creating storage facility for another five lakh tonnes.

HPCL is at present operating a 7.5-million tonne refinery, and has about one million tonne capacity of crude and petroleum products' storage facility at Visakhapatnam. Implementation of the clear fuel project with an outlay of about Rs 1,600 crore is under progress at HPCL's Vizag refinery.

In addition to producing clean fuel, the capacity of the refinery will be enhanced to 8.3 million tonnes by March 2006 under the first phase of the project while it will be increased to 10 million by 2007 in the second phase.

"The management has decided to expand the capacity of the Vizag refinery to 15 million tonnes. The proposal is in the preliminary stage and the investment size is not yet finalised," a senior official at Vizag refinery told Business Standard.

HPCL would finalise the proposal only after the Visakhapatnam Port gives a nod for land allotment. Vizag port has already allotted nearly 750 acres of land to HPCL for setting up refinery and storage tanks.

However, HPCL is seeking another 300-400 acres of land to create additional storage facility near the existing refinery. Since it is not possible to enhance the capacity of the refinery without creating additional storage facility, a team of officials from HPCL met the port officials a few days back and held discussions about the land allotment.

"HPCL is seeking 300-400 acres of land to take up its expansion programme at the Vizag refinery. Though we are ready to allot additional land in our port area, which is adjacent to the existing refinery, we are waiting for a request letter from the HPCL officials. Only then, can we discuss the matter at our board meeting," Sripadha Sastry, chief engineer (civil) of Visakhapatnam Port, told Business Standard.

If the refinery capacity is increased, it will create an additional revenue stream for the Vizag port.

"Setting up a five-million tonne green field refinery would cost more. In contrast, increasing the capacity by another five million tonne in the existing refinery will not cost as much. Due to this, the management is interested in expanding the capacity at the Vizag refinery," the HPCL official said.

Moreover, HPCL is importing crude oil in VLCCs (very large crude carriers). For this, it is planning to build a mooring berth, which will cost between Rs 350 crore and Rs 400 crore, at the outer harbour of the Vizag port, in collaboration with the port.

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Refining growth

• Expansion proposal to be finalised after Vizag port gives nod for land allotment
• HPCL plans to build mooring berth with a cost of Rs 400 crore at the outer harbour of Vizag port