Steel baron Lakshmi Mittal is likely to get another toe-hold in India's refining sector with the signing of a memorandum of understanding (MoU) with Hindustan Petroleum Corporation (HPCL) to study the feasibility of a 15 million tonne per annum (mtpa) refinery and a one mtpa petrochemical complex at Visakhapatnam in Andhra Pradesh.
The project, if found feasible, will mark Mittal's second investment in India's energy sector, after he picked up a 49 per cent stake in HPCL's Bathinda refinery.
The government had relaxed the foreign direct investment norms from the existing 26 per cent to 49 per cent, as a one-off case, to allow Mittal to take a share in the Bathinda refinery.
French oil giant Total is the other heavweight partner in the proposed refinery-cum-petrochemical project at Visakhapatnam. This is the maiden entry into the country's refining sector for Total, which is present in India's LPG market through its subsidiary Elf.
Other partners in the project, which will involve an investment of about Rs 24,000 crore, are GAIL (India) and Oil India Ltd.
"We will undertake feasibility studies for the petrochemical complex. During the course of the feasibility study we will also look into all possibilities including a 15 mtpa refinery," HPCL chairman and Managing Director Arun Balakrishnan said.
The feasibility study would be completed in six months. "After six months we will take a decision whether we should go ahead with the project," Balakrishnan said. The equity structure and project cost would be decided only after the feasibility studies are completed.
Total will take the lead in conducting the feasibility study for the refinery project and GAIL would take charge of the feasibility study for the petrochemical unit. The Visakhapatnam refinery-cum-petrochemical project will come up at the Petroleum, Chemicals and Petrochemical Investment Region (PCPIR) planned in the area.
HPCL already has an existing 7.5 mtpa refinery in Visakhapatnam which is being expanded to 15 mtpa.
"That is a different project. The new refinery and attached petrochemical plant is a separate project for which we have signed the MoU with the four partners," Balakrishnan said.
The one mtpa petrochemical complex would nearly equal the polymer manufacturing capacity of the country's largest petrochemical company, Reliance Industries.
