MRPL may set up Kakinada refinery

The petroleum ministry wants Mangalore Refineries and Petrochemicals (MRPL) to implement the proposed Rs 5,000 crore refinery at Kakinada in Andhra Pradesh instead of Oil and Natural Gas Corporation (ONGC).

ONGC wanted to join IL&FS and the Andhra Pradesh Industrial Development Corporation (APIDC) to build an export-oriented refinery at Kakinada, and had sought the ministry's permission to put in its equity, an official said.

The ministry, however, opined that ONGC should stick to its core business of exploration and production, and leave allied activities such as refining to its subsidiary MRPL.

"With the increasing trend in our oil and gas production in western as well as eastern offshore, there is an opportunity to create refining capacity on the east coast - supplementing the refining capacity of MRPL on the west coast," ONGC CMD Subir Raha had said in a letter earlier this month to the petroleum ministry.

"This will help optimise the product marketing logistics and thereby offer competitive advantage," he added, while indicating that equity participation by ONGC and APIDC would be restricted to a maximum of 50%.

The oil ministry, however, said MRPL was best suited for the project.

IL&FS has an MoU with APIDC for developing a refinery in a proposed special economic zone at Kakinada.