Calcutta, June 6: Bharat Petroleum Corporation (BPCL) has decided to almost double the annual capacity of its 6.9-million tonne Mumbai refinery to 12 million tonnes even as selloff in the company gathers pace. A senior executive of the state-owned firm said the expansion, which will cost around Rs 1600 crore, should be through by March 2004. The planned disinvestment, he said, would not hamper the project schedule.
An increase in capacity will give BPCL greater flexibility in processing cheaper crude laced with high sulphur. “The capital investment will benefit us in the long run as refining margins will be better if high-sulphur crude is processed,” he added. The rate of return on investment will be approximately 17 per cent.
The decision to raise capacity goes hand in hand with a retail-expansion blitz that will see 800-1000 new pumps added to its existing network of 4,562 gas stations. An amount of Rs 550 crore has been set aside in the current financial year to take this plan to fruition.
“The focus will be on the Golden Quadrilateral, the multi-crore highway project now under way. We plan to set up at least 400 retail outlets on these highways,” they said.
BPCL, with a share of over 20 per cent in the petro-product market, intends to go oil hunting (exploration and production of crude) to achieve vertical integration. It has tied up with Oil India to pick up a stake in developed blocks so that it can secure oil equity — crude supplies in exchange for the equity held. This will be critical once the market is opened to competition.
BPCL’s ability to refine will receive a boost from the upcoming Bina refinery, which will be completed in two years. It has won government approval to raise its stake in the refinery from 26 per cent to over 50 per cent.