Kochi Refinery upgrade pegged at Rs 1819 crore

Axens of France, one of world's leading consultancy firm in the oil and gas sector, has valued the modernisation and expansion programme of Kochi Refinery Ltd at Rs 1,819 crore.

The preliminary feasibility report (PFR) prepared by the French company has already been submitted to KRL.

The project is expected to be completed in two phases. A detailed feasibility report is now being prepared for both the stages.

The first phase, expected to be completed by January 2005, envisages upgradation of refining capacity for motor spirit (MS) and high speed diesel (HSD) to meet the Bharat State - II norms.

In the second phase, which will be completed by 2010, KRL intends to ramp its capacity by 2.5 million metric tonne (MMT).

It will also include modernise the refining capacity to meet the Bharat Stage - III norms for MS and HSD.

The company hopes that the first phase will increase gross margin by Rs 95 crore every year. The second phase will further reduce the operating cost for the company.

Experts feel that with the tighter pollution control norm introduced throughout the country, the upgradation will be critical for the future viability of KRL.

KRL, a subsidiary of BPCL, has now refining capacity of 7.5 MMT per annum. After the expansion, its capacity will go up to 10 MMT.

The company also proposes to set up a crude oil receipt facility (CORF) consisting of single buoy mooring (SBM), shore tank farm and associated pipelines.

The CORF would facilitate transportation of crude oil in larger tankers, thereby lowering the cost incurred in transportation of crude oil.

The detailed feasibility report (DFR), which was prepared with the assistance of Engineers India Ltd (EIL), envisage setting up the CORF at Puthuvypeen within the limits of Cochin Port Trust (CPT).

Moreover, the company is now in the process of implementing SAP R/3. In the first phase, materials management, sales and distribution, plant maintenance, project systems, finance, control, human resource and payroll modules are being taken up.

In the second phase, asset management, control profitability accounting and control profit centre accounting would be brought under SAP. This part will be completed by April 2004. The total estimated cost envisaged at Rs 26.4 crore.

KRL achieved an all time high turnover of Rs 10,480 crore in 2002-3, a growth of 55 per cent. The profit also surged to Rs 696.5 crore as against Rs 118,6 crore in 2001-2.