Bharat Petroleum Corp Ltd has decided to fund the Rs 20,000 crore expansion of the Bina refinery in Madhya Pradesh on its own after the reluctance of Oman Oil company to put more money. India’s 2nd biggest state refiner, Bharat Petroleum Corp (BPCL), has planned to raise Bina refinery capacity to 15 million tons in two phases – o 7.8 million tons a year from current 6 million tons at a cost of Rs 3,500 crore by 2018 and then to 15 million tons at an additional investment of Rs 18,000-20,000 crore in 5-6 years.
A top official said that Oman Oil Company (OCC) which also holds a 26 & stake in the Bharat Omar Refineries (BORL) – the firm that built the refinery, is willing to participate in the first phase expansion but not in the second phase.
“We are close to firming up plan to go ahead with the second phase expansion on our own. BPCL will fund the project,” he said.
For a re-entry into the Rs 11,397 crore Bina refinery project, OCC had paid a 50 % premium in 2009. The project was originally conceived through a joint venture company, BORL but the OCC did not contribute equity beyond the initial Rs 75 crore. The Omanese oil major came back to pick up 26 percent stake in the project for an additional Rs 1,220 crore. Formed in 1993, BORL is an equal joint venture company. OCC froze its investment in the company at Rs 75 crore for a two percent equity stake after irordinate delays in the implementation of the project. The 4000 crore equity in the form of loan was provided by BPCL which holds a 49% stake in the project.
The official said BPCL is expanding and upgrading its Kochi refinery in Kerala to process high sulphur crudes by 2016. Kochi refinery capacity is being raised to 15.5 million tons from current 9.5 million tons. Crude grades with a high sulphur content are cheaper, and refineries that have installed speciality secondary units to process them can lower feed costs and increase their margins. Besides boosting margins with the upgrade and expansion, the refinery will also be able to produce fully Euro IV compatible petrol and diesel. Also, Numaligarh refinery capacity is being planned to be raised to 9 million tons. The expansion, however, is still at the drawing-board stage and it would hinge on tax concessions and other benefits from the central and state governments, he said.
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