The Oil Industry Development Board (OIDB) has sanctioned about Rs 150 crore to Cochin Refineries and Madras Refineries as long-term credit for the diesel hydro-desulphurisation (DHDS) units being set up by the two companies at a cost of over Rs 1,200 crore. The actual disbursement of these loans is currently being processed.
The two public sector enterprises had requested for OIDB loan to part-finance their project costs during the public investment board (PIB) meet in March this year, which cleared all the nine DHDS (a process which will yield a superior quality diesel with low sulphur content) units involving investment of $1.67 billion (Rs 6,000 crore).
Meanwhile, on advice from Engineers India Ltd which has undertaken the design and procurement contract for all the nine projects, the ministry of petroleum and natural gas has finalised the various technical contracts for all the nine projects treating them as a composite package.
Project engineering giants IFP of France and US-based UOP have been awarded the contract for the hydro-treaters, while the sulphur treatment plants will be executed by Dutch firm Comprimo and public sector EIL, in collaboration with Delta Hudson of Canada.
The contract for hydrogen units have been awarded to KTI of the Netherlands for all non-IOC (Indian Oil Corporation) projects, while Halder-Topsoe of Germany will be handling all the IOC.
Of the nine DHDS units, four are being set up by Indian Oil Corporation (IOC), two by Hindustan Petroleum Corporation, and one each by Bharat Petroleum Corporation, Cochin Refineries and Madras Refineries.
The Cabinet approval for these projects came recently. All the nine DHDS units are scheduled to be commissioned by April 1999, a deadline set by the Supreme Court in its 1995 directive to the Government of India to introduce low sulphur diesel in the domestic market in order to curb pollution.
The DHDS units are expected to limit the sulphur content in diesel marketed locally to around 0.25 per cent against the current levels of about 1.0 per cent. The accepted sulphur levels in most developed countries are at 0.05 per cent levels.
While Cochin and Madras Refineries approached OIDB for loan, IOC, HPCL, and BPCL have expressed their ability to raise finances from internal and external sources for their projects.
IOC is setting its four units at Baroda, Mathura, Panipat and Haldia. HPCLs two units are coming up at Mumbai and Vizag, and BPCLs project is slated to come up at Mumbai. EIL has estimated an average cost of about Rs 600 to Rs 700 crore upto the stage of commissioning for each unit.
The petroleum and natural gas ministry has intimated to EIL to adhere to the April 1999. EIL had, in its earlier presentations to the ministry and to the companies, maintained that the deadline could be met only if the project blueprints were complete by June 1996. However, as per current status, the projects are about 12 to 18 months behind schedule.
As a result of the delay, EIL has decided to subcontract part of the engineering work for each of the project based on competitive bidding.
International engineering companies like LG Engineering of South Korea, US-based Prichard Corporation, and Parsons of the UK are believed to have already made their pitches to the ministry as well as to EIL for winning the contracts.
