The power project will also give the corporation a tax shelter for five years once the current expansion plans are completed by 1998.
While finalisation of the power project is on, the refinery venture may take a while. IPCL will proceed only after the government decides on full decontrol of the oil sector.
The size and investment in the power project is not known. However, the total investments for the power and refinery projects are estimated to be between Rs 7,000-10,000 crore. The company may join hands with a partner to implement these.
According to corporate sources, IPCL will choose between Vadodara and Gandhar for the power project. The company has vast tracts of vacant land near its petrochemical complexes in both cities.
With ready supply of naphtha and natural gas, the corporation is planning dual fuel based power projects which will supply only to the state grid.
The petrochemical giant already has captive plants supplying power to its petrochemical units.
A third alternative being considered is using imported liquefied natural gas (LNG) for the project.
The company has the necessary infrastructure at Gandhar to import LNG. A jetty was commissioned recently at Dahej, near Gandhar to handle naphtha imports required for phase-1 of the Gandhar complex.
Phase-1 consists of a chlor-alkali plant of 1.3/1.15 lakh tonnes of caustic soda and chlorine, 1.5 lakh tonnes of polyvinyl chloride (PVC), 65 MW of captive power and 1.7 lakh tonnes of vinyl chloro monomer (VCM).
The crude refinery is intended as a part of its backward integration strategy. If the company decides on investment, the refinery will come up next to one of its petrochemical units.
However, the refinery is a long-term project and is likely to take concrete shape only by the year 2000. IPCL feels that several factors like the demand-supply position of petroleum products and the mushrooming of new refineries in western and northern India will have to be considered.
Preliminary details of the power project will be placed before IPCL board by end of October.
After clearance, the proposal will go to the central government for approval.
The proposed investment in the power project will give the corporation a tax shelter for the next five years after the phase-II of Gandhar complex is commissioned by 1998. The corporation has made a provision of Rs 366-crore for taxation during 1995-96.
Besides tax shelter, through these forays, the corporation is also trying to cushion itself from the cyclical nature of the petrochemical industry.
The industry is witnessing a downslide in petrochemicals prices. Analysts expect the situation to continue for some time.
