New Delhi: With Oman Oil Company reluctant to put more money, Bharat Petroleum Corp Ltd has decided to fund the Rs 18,000-20,000 crore expansion of the Bina refinery in Madhya Pradesh on its own.
Bharat Petroleum Corp (BPCL), India's second-biggest state refiner, plans to raise Bina refinery capacity to 15 million tons in two phases - to 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.
Oman Oil Company (OCC), which holds 26 percent stake in the Bharat Oman Refineries (BORL) - the firm that built the refinery, is willing to participate in the first phase expansion but not in the second phase, a top official said.
"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.
OCC in 2009 paid a 50 percent premium for a re-entry into the Rs 11,397-crore Bina refinery project. 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.
The BORL was formed as an equal joint venture company way back in 1993. However, following inordinate delays in the implementation of the project, OOC froze its investment in the company at Rs 75 crore for a two percent equity stake.
BPCL, which holds 49 percent stake in the project, provided the unbridged portion of the Rs 4,000-crore equity in form of loan. The state-run firm got its loan back once OOC made payments for its 26 percent share.
The remaining 25 percent is with financial institutions.
BPCL also operates a 12 million tons a year refinery at Mumbai and 9.5 million tons Kochi unit. It also has majority stakes in the 3 million tons Numaligarh refinery in Assam.
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.
