MRPL faces 37% cost overrun for expansion

Mangalore Refinery and Petrochemicals, a subsidiary of Oil and Natural Gas Corp, is likely to witness an over 37 per cent cost escalation for expansion of its refinery capacity at Mangalore, Chairman RS Sharma said on Thursday.

The capacity is being increased to 15 million tonne per year from the current 9.69 million tonne.

"Investment in the project is likely to be over Rs 11,000 crore as against Rs 8,000 crore approved by the board," Sharma said.

He said the cost overrun is due to a "significant rise" in input cost since the investment was approved in January 2006. MRPL Managing Director R. Rajamani said the expansion is likely to be completed by the end of 2010.

"We have floated enquiry for engineering, procurement and construction contracts for the crude distillation unit and vacuum distillation unit and the power plant. We hope to award the contracts in 2-3 months," Rajamani said.