New Delhi: Mangalore Refinery and Petrochemicals Ltd will invest about Rs12,000 crore in expanding its capacity to 15 million tons by October 2011 but has put on hold plans to set up a new grassroot refinery-cum- petrochemical plant.
“Refinery completion will happen well in time for availing the income tax holiday,” MRPL Chairman R S Sharma told reporters here today.
Government has notified that public sector refineries commissioning after 31 March, 2012 will not be entitled to avail of the seven-year income tax holiday.
“We have been finding it difficult to find contractors as most say their hands are full,” he said.
The cost of expansion has gone up from 2006-approved cost of over Rs8,000 crore, MRPL Director (Finance) L K Gupta said. “We will take the revised cost to the board at the next meeting. It should be in the vicinity of Rs12,000 crore.”
The project cost is to be funded in a debt-equity ratio of 2:1 but the company need not borrow funds till 2009-end.
MRPL, a unit of state-run Oil and Natural Gas Corp (ONGC), has however put on hold plans to construct a new 15 million tons refinery and adjacent aromatic and naphtha cracker projects.
“Its not that we have dropped the project but have kept it on hold as there were huge only-for-exports capacities coming up,” he said.
Sharma, who is also the Chairman and Managing Director of ONGC, said MRPL will invest Rs3,180 crore in 2008-09, most of it being in refinery expansion. For the current year, capital expenditure has been scaled down from Rs825 crore to Rs542 crore as projects took longer time for execution.