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Indian Oil pipeline plan rocks Haldia dock

Calcutta, Sept. 22: One has to sink to keep the other afloat. Finding themselves on the horns of this excruciating dilemma are Haldia Dock Complex and Indian Oil.

The oil major says it cannot procure crude through the port if it has to keep its refinery humming. The dock that lives off these consignments will run aground if Indian Oil goes ahead with its plan to lay a pipeline that will bring the crude from Paradeep to Haldia.

IOC is drifting away from HDC because the cost of transportation is too high. A pipeline is the only way it can run its refineries in Haldia and Barauni, which are suffering heavy losses because of high freight costs.

“For every tonne of crude that is brought to Haldia, our additional outgo on freight is more than Rs 500. This has made operations of the two refineries unviable, especially in a competitive market,” he added.

The company has won board approval for the pipeline, and will send a detailed proposal to the government soon. The project cost is estimated at Rs 500 crore, an amount that will be funded from internal accruals.

According to .K. Nayyar, Indian Oil’s director (planning & business development), the pipeline will give the two refineries in the eastern region a lifeline. “Money pumped into the project will flow back in a few years from the day the project goes on stream,” he added.

Crude will arrive in extra-large crude carriers (ELCC) to Paradeep, from where it will be pumped to Haldia. These mammoth vessels cannot sail to Haldia port because excessive silting has led to a situation where it does not have the depth required for navigation.

For Haldia port, which makes 50 per cent of its money from these crude shipments and has few alternative sources of earnings, Indian Oil’s exit could spell doom.

M. L. Meena, deputy chairman HDC and Calcutta Port Trust, conceded it will be an irreversible loss for the dock if Indian Oil lays the pipeline from Paradeep to Haldia.

“We get business worth Rs 80 crore every year from IOC alone. We have tried our best to persuade the company to continue with us. But I believe the company is already setting up the pipeline,” Meena added.

Haldia Dock handles about 11 million tonnes of IOC crude every year, which is almost half of its total business.

The Calcutta Port Trust also suggested that the oil major set up a joint venture to build a floating terminal at Sandheads, but the idea fell through on costs.

“If we offload crude in Sandhead and bring it to Haldia port in smaller vessels, the transport cost will not go down. Hence, this is not the ideal solution to the problem,” said Ramchandran. Instead, a pipeline will deliver the goods much better, pruning costs so sharply that it would even be possible to expand the Haldia refinery.

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