Hindustan Petroleum Corporation Ltd plans to invest over Rs 2,787 crore (Rs 27.87 billion) in raising its Mumbai and Vizag refinery capacities through de-bottlenecking and process upgradation for higher volumes and better fuel quality.

De-bottlenecking of the primary and secondary processing units would result in HPCL's Mumbai refinery capacity going up to 7.9 million tonnes from 5.5 million tonnes, while the Vizag capacity would go up to 8.3 million tonnes from 7.5 million tonnes currently, an internal company paper said.

The Rs 1,152.2 crore (Rs 11.52 million) project, which includes a foreign exchange component of Rs 178.5 crore (Rs 1.78 billion), would maximise the Mumbai refinery's distillate yeild and enable it to produce petrol and diesel of Euro-III specification.

Currently, the Mumbai refinery produces petrol and diesel meeting the Euro-II standards. The project is expected to be completed in 30 months.

HPCL's Vizag refinery, which already produces part petrol and diesel of Euro-II specification, would spend Rs 1,635.1 crore (Rs 16.35 billion) for upgradation of the primary/secondary units in 30 months.

The Rs 1635.1 crore-cost includes a foreign exchange component of Rs 252.4 crore (Rs 2.52 billion), the paper said.

The government is currently in the process of divesting its 34.01 per cent stake in HPCL.

Suitors for HPCL, which owns over 4,800 petrol stations in the country, include Shell-Saudi Aramco, BP-Kuwait Petroleum Corp, Petronas of Malaysia, Chevron Texaco, Essar Group and Reliance Industries Ltd.

The de-bottlenecking and process upgradation of the two refineries may include putting up a catalytic reformer unit, isomerisation unit, naphtha hydrotreater/splitter units and flue gas desulphurisation unit, among others.

The paper said the investment in refinery upgradation had become necessary since the government planned to implement the Euro-III and Euro-IV vehicular emission norms in the country in phases by 2010.

The implementation of the norms would necessitate improving the fuel quality by reducing sulphur and benzene content on part of the refiners and the upgradation of vehicle engine by the automobile manufacturers.