| The turning point
New Delhi, April 24: Indian Oil Corporation (IOC) has increased the investment in its planned refinery at Paradip from Rs 11,000 crore to Rs 19,000 crore to provide resources for a petrochemicals complex within the project.
According to IOC sources, Shell Global and Engineers India have been entrusted with the task of preparing a feasibility report for the revised plan that will include the petrochemicals unit. The report is due in July.
On the face of it, Haldia's loss is turning out to be Paradip's gain. The Bengal government had refused to respond to IOC's Rs 5,700-crore package to develop Haldia into a world-class petrochemical hub if it was given management control of Haldia Petrochemicals (HPL).
Bengal's decision to back Purnendu Chatterjee, who has been keen on management control of HPL, prompted IOC to think of Paradip as an alternative in the east.
The feasibility report for the Paradip refinery are being prepared for capacities of 9 million tonnes and 15 million tonnes. This will give Indian Oil the option of going in for the more profitable option if demand remains strong. The company has already given its commitment to completing the Paradip refinery by 2009-10 but is willing to advance it to 2008-09 if the demand for petroleum products is high enough to justify the move.
'IOC is thinking of going in for a petrochemicals product mix of paraxylene, polypropylene, PVC and styrene at Paradip but this will be finalised only after the feasibility report is in,' a senior official told The Telegraph.
The Fortune 500 company is investing Rs 6,300 crore in a petrochemicals complex at its Panipat refinery. A naphtha cracker and polymer complex are being set up even as the refinery's capacity is doubled to 12 million tonnes.
Petrochemicals is the new thrust area for IOC, which wants to move up the value-chain by converting petroleum products such as naphtha into petrochemicals. The company has drawn up a Rs 30,000-crore plan for its petrochemicals ventures. These will be based on captive streams emanating from its own refineries.
The petrochemicals business, in which Reliance enjoys a near-monopoly after the acquisition of IPCL, is concentrated in the western part of the country. IOC will get a chance to break into the northern and eastern regions with its Panipat and Paradip projects. Of the Rs 24,399 crore that IOC plans to invest in the Tenth Plan (2002-07), 45 per cent has been earmarked for petrochemicals.