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Rediff.com  » Business » HPCL plans new refinery in Vizag

HPCL plans new refinery in Vizag

Source: PTI
August 16, 2005 15:18 IST
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Hindustan Petroleum Corporation plans to invest Rs 18,000 crore (Rs 180 billion) for building a new 15 million tonne export-oriented refinery at Visakhapatnam in Andhra Pradesh and another Rs 1,635 crore (Rs 16.35 billion) to increase capacity of its existing refinery.

"Our existing 7.5 million tonnes per annum Vizag refinery has space constraints and we cannot expand it beyond a certain capacity. We have drawn plans to build a new refinery some 30-35 kms away from the existing refinery," said M B Lal, chairman and managing director, HPCL.

The company has approached the Andhra Pradesh government to allot 2,500 acres of land in the proposed Special Economic Zone at Vizag for the new refinery.

Lal said HPCL will implement the project through a subsidiary and will seek foreign partners for building the refinery. The equity structure in the new Vizag refinery is similar to the one proposed for the 9 million tonne Bhatinda

refinery where HPCL and a foreign partner will have 26 per cent equity each in the subsidiary while the rest 48 per cent would be offered to the public through an IPO.

British Petroleum, Total of France, Malaysia's Petronas and Saudi Aramco of Saudi Arabia have evinced interest in partnering with HPCL in the Rs 12,000 crore (Rs Bhatinda refinery.

"We are in advanced stages of talks with the 3-4 firms and we expect to make an announcement in two months," he said.

The existing Vizag refinery is being raised to 8.3 million tonnes at an investment of Rs 1,635 crore by the end of 2006, he said, adding the refinery would be further expanded to 12 million tonnes by 2007-08.

HPCL, which besides the Vizag refinery also owns a 5.5 million tonne refinery in Mumbai and some 6,800 petrol pumps, also proposed to the government to set up a refinery in Barmer district of Rajasthan where Cairn Energy of UK has found 1.2 billion barrels of oil reserves.

Lal said HPCL would invest Rs 1,152 crore (Rs 11.52 billion) to raise Mumbai refinery capacity from 5.5 million tonnes to 7.9 million tonnes per annum. The expansion would be completed by the third quarter of 2006.

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