HPCL, ONGC eye stake in Bina refinery

Hindustan Petroleum Corporation Ltd (HPCL) and Oil and Natural Gas Corporation (ONGC) are exploring the possibility of picking up equity in the much-delayed Rs 6,354 crore, 6-million tonne Bina refinery in Madhya Pradesh, jointly promoted by Bharat Petroleum Corporation Ltd (BPCL) and Oman Oil.

This development follows a Supreme Court ruling on January 19 on an interpretation of the Wildlife Protection Act, which cleared the decks for laying the crude oil pipeline through notified national parks and sanctuaries in Gujarat and Madhya Pradesh.

"HPCL and ONGC have approached us to pick up equity in the joint venture company Bharat Oman Refineries for setting up the Bina refinery. The decision will be taken depending upon which partnership is more beneficial to the refinery," a BPCL executive told Business Standard.

Even as several options are being considered to induct either HPCL or ONGC or both as partners, BPCL has decided to keep a substantial stake in the joint venture company, with management control. "Oman Oil Company will also hold a small stake in the company as it has not fully pulled out of the joint venture," the executive added.

"The refinery was conceived when the petroleum sector was still a controlled industry and under administered pricing mechanism. It had then taken into consideration HPCL's product shortfall for marketing in central India. Now in a free market, HPCL will continue to have a shortfall and is interested in picking a stake in the refinery so as to get an assured product supply," he said.

Conceived in the early 1990s, the Bina refinery was to meet the growing demand for transportation fuels in the central and northern regions of the country.

The project was, however, held up over environmental clearances by the Union ministry of environment and forests and state governments of Gujarat and Madhya Pradesh. With the project endlessly delayed, Oman Oil expressed its desire to pull out.

However, the recent Supreme Court decision has clarified the provisions of the Wildlife Protection Act and will enable the company to go ahead with its plans.

With several changes in the product specifications mandated by law, including the Euro-III and Euro- IV norms for transportation fuels, "we are re-visiting the product configuration of the refinery. The design and installations will undergo some changes. We are now completing the design on the drawing board," a BPCL executive said.

Apart from the Rs 6,354 crore refinery, BPCL will build the associated facilities: a marketing terminal, at a cost of Rs 463 crore; and the Bina-Jhansi-Kanpur pipeline at as cost of Rs 453 crore.

As of now, the total commitments for the refinery project are Rs 242 crore, of which Rs 156 crore has been spent. The company has already acquired land for the refinery as well as for a township, a marketing terminal and a crude oil terminal at Vadinar in Gujarat.