IOC, BPCL, HPCL to sign JV deal for $40 billion refinery in Maharashtra
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New Delhi: State-owned refiners Indian Oil Corp. (IOC), Hindustan Petroleum Corp. Ltd (HPCL) and Bharat Petroleum Corp. Ltd (BPCL) will sign a deal on Wednesday to set up a joint venture refinery-cum-petrochemical complex on coastal Maharashtra, which would be the world’s largest with a capacity of 60 million tonnes.
Oil ministry said the deal will be signed in the presence of oil minister Dharmendra Pradhan. A person privy to the discussions among the companies, who spoke on condition of anonymity, said that initially, Indian Oil Corp. will hold 50% stake, while the others will hold 25% each, with a provision for inducting one or more strategic investors at a later stage. The project is estimated to cost $35-40 billion, this person said.
The plan to add refining and petrochemical capacity in the country comes in the wake of rising consumption of hydrocarbons and the government’s efforts to make India a regional refining and petrochemical hub.
The country at present has about 230 million tonnes of refining capacity and wants to expand the same over the medium term. Several of the refinery byproducts are feedstock for the petrochemical industry and hence, it makes sense to have a petrochemical complex attached to the refinery. Also, margins are better in petrochemicals compared to refinery products like fuel, because of the higher amount of value addition possible, explained another industry executive, who also spoke on condition of anonymity.
India already has a $40-billion petrochemical industry, but it accounts for a small share in the $600 billion global petrochemical market dominated by China and the US. Petrochemicals are used in the production of a large number of everyday use products, including textiles, pipelines, detergents and paints.