Indian Oil's Paradip petrochem plans hit by crude volatility

The final commissioning deadline of the Rs 15,000 crore petrochemical complex of Indian Oil Corporation (IOC) at Paradip may slip by a few months.

IOC chairman Sarthak Behuria on Saturday said: "The current price volatility and the supply glut could call for a slight repositioning of the commissioning of this megaproject."

He added that high global crude prices and subsidy burden have beaten down margins of oil companies, he said the scenario has strained the resources available for new projects.

"The government of India proposes to raise funds through issue of oil bonds. When that happens, this will provide us the requisite funds to for the Paradip project", he added. Behuria was talking to newsmen on the sidelines of a meeting convened by the Utkal Chamber of Commerce and Industry (UCCI).

Reaffirming the IOC commitment to set up the Paradip refinery, Behuria said, Engineers India Ltd (EIL) is currently preparing the detailed feasibility report (DFR) of the project with help from Global Solutions. The DFR will be ready in a couple of months. After it is approved by the board, the work on the project will pick up pace, he observed.

It may be noted that the Paradip project has been reconfigured from a refinery to a petrochemical complex. Besides, the capacity of the refinery has been ramped up to 15 million tonne from original 9 million. Paradip is IOC's 11th refinery in the country.

Beuria said, IOC has already spent about Rs 600 crore at site at Paradip towards land acquisition, ground levelling and civil construction.

Informing that the company is exploring the concept of making Paradip an export hub, he said, "The proposed complex will explore all available opportunities for export of finished products to countries in the Asia Pacific region and earn foreign exchange for the country".

He said, IOC's Paradip-Haldia crude oil pipeline, costing about Rs 1,178 crore, was also under construction and was expected to be completed during the first half of 2006.

This will further enhance the overall development of Paradip port as an important import/export hub in the years to come. Behuria did, however, point to the need for creating a conducive business environment, which was critical for the development of industry.

While acknowledging the "unstinted support and cooperation" extended by the Orissa government to the IOC, he said the government had extended several incentives to the greenfield projects proposed by the company.

However, certain areas still needed to be addressed for ensuring a conducive business environment in the state, he pointed out and in this regard drew the attention of the government to issues like expediting notifications and clarifications on continuation of incentives offered to investors.