IOC to take final view on Paradip project by Sept

The Indian Oil Corporation (IOC) board will take a decision on its revised Paradip refinery project by September, 2005.

The Engineers India Ltd (EIL) is currently preparing the detailed feasibility report (DFR) of the project with help from Global Solutions.

Once the DFR is ready, the IOC board will take it up for approval in August-September, Sarthak Behuria, chairman and managing director of IOC told Business Standard.

After the board's approval, it will take about a year to prepare the detail engineering of the project, do the risk analysis and finalise the project management contracts etc., Behuria said.

"The physical work on the project will start towards end of 2006 and we have set the target to commission the project by the end of 2009," he added.

Behuria was in Bhubaneswar to discuss the Paradip refinery project with state chief minister Naveen Patnaik.

Only recently has the project been reconfigured from a refinery to a petrochemical complex, he said. Besides, the capacity of the refinery has been ramped up to 15 million tonne from original nine million tonne. The project cost also has gone up to over Rs 15,000 crore.

During his meeting with Naveen Patnaik, Behuria is said to have requested a tax concession for the revised project. Sources said that the state chief minister has assured that such matters would be looked into after the size of the project is finalised.

Before reconfiguration of the project, the state government had sanctioned a concession package of Rs 6,666 crore to the refinery that included deferment of sales tax payment for 11 years and exemption on payment of central sales tax, octroi, entry tax levied on machineries and electricity duty etc.

The proposed petrochemical complex will devote about 30-35 per cent of the refinery capacity for production of various polymer and polyester products, Behuria said. There will be a naptha stream too.

Being a shore-based refinery, the company intends to export some of the products such as diesel, initially. The proposed refinery will supply about 3 million tonne of oil to the northern region through a pipeline to be constructed from Paradip to Allahabad via Rourkela.

Meanwhile, another pipeline project of the company linking Paradip and Haldia will be completed by next March. The pipeline will carry crude from Paradip to Haldia in West Bengal and Barauni in Jharkhand. The pipeline is intended to bring down the high crude handling costs at Haldia port.

Apart from the pipeline, the scope of the project includes construction of a single point mooring (SPM) and crude oil terminal at Paradip.

The cost of the project is estimated at about Rs 1,178 crore. Behuria said that the company spends about Rs 8,000 crore every year on new projects in the country.