At Rs 95k cr BPCL's AP Refinery To Be Costliest Greenfield Project

Visakhapatnam: State-owned Bharat Petroleum Corporation Ltd's (BPCL) proposed 9 million tonnes a year oil refinery-cum-petrochemical complex in Andhra Pradesh is likely to cost around Rs 95,000 crore, its Director (Finance) Vetsa Ramakrishna Gupta said.

This will be India's costliest refinery project so far. Hindustan Petroleum Corporation Ltd (HPCL) will this year commission a similar size unit at Barmer in Rajasthan at a cost of Rs 71,814 crore. In Modi government's first term, a mega 60 million tonnes oil refinery and petrochemical complex was proposed at Ratnagiri district of Maharashtra at a cost of Rs 3 lakh crore but the project hasn't seen the light of the day because of land acquisition issues.

In an investor call with analysts post announcement of third quarter earnings, Gupta said the BPCL board last month approved an expenditure of Rs 6,100 crore on pre-project activities such as land acquisition and commissioning of detailed project report (DPR) and certain feedstock studies.

"Roughly the initial indication of capex requirement will be around Rs 95,000 crore at gross level," he said, adding the Andhra Pradesh government has also indicated a good amount of capital subsidy incentives. He however did not indicate the fiscal support from the state government.

"We will come to a final number in December when DPR and feed study will be over," he said. "Parallely, we are exploring (to induct) a joint venture partner." No details were given. The refinery is likely to be commissioned in 48 months from the final investment decision (FID).

Giving details of the refinery, he said it will be a coastal refinery and land has been identified. "We are looking for 6,000 acres of land... land has been identified and an acquisition process has to start." It will take 6 to 9 months to complete DPR and feedstock studies to be carried out.

"Significant amount of pre-investment (needs to take place) before taking any financial decision," he said. The refinery will be of 9 million tonnes a year capacity (crude oil processing capacity). This processing will produce 3-3.5 million tonnes of fuels like petrol and diesel, and 3.8-4 million tonnes of feedstock of petrochemicals.

The pre-project activities include initial studies, land identification, and acquisition, preparation of detailed feasibility report, environment impact assessment, basic design engineering package, and front-end engineering design.

BPCL is India's third largest oil refiner behind state-owned Indian Oil Corporation (IOC) and Reliance Industries Ltd. It currently owns refineries at Mumbai (12 million tonnes a year capacity), Kochi in Kerala (15.5 million tonnes) and Bina in Madhya Pradesh (7.8 million tonnes).

It had lost a fourth oil refinery to Oil India Ltd in the aborted privatisation plan. BPCL had to give up its Numaligarh refinery in Assam to Oil India Ltd when the government was attempting to privatise the company. The transfer was to keep the Numaligarh unit within the public sector to honour the Assam Accord. But BPCL privatisation was aborted due to lack of interest by bidders.

The planned unit in Andhra Pradesh is being touted as India's last greenfield refinery project.