Maharashtra’s mega refinery, petchem project faces land acquisition hurdle

The Maharashtra government wants IOC, BPCL, HPCL and the oil ministry to reduce the 15,000 acres of land required for the refinery, officials say


Union oil minister Dharmendra Pradhan said the oil marketing companies (OMCs) will form a special purpose vehicle (SPV) for the project. Photo: Mint
Union oil minister Dharmendra Pradhan said the oil marketing companies (OMCs) will form a special purpose vehicle (SPV) for the project. Photo: Mint

Mumbai: A mega-refinery and petrochemical complex slated to come up in coastal Maharashtra may run into land acquisition troubles, three officials aware of the development said. 

Indian Oil Corp. Ltd (IOCL), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL) plan to jointly build the 60 million tonnes per annum (mtpa) refinery at a cost of Rs.1.5 trillion. The oil companies may jointly hold a 51% stake, while the state government and a strategic investor who is yet to be brought in will hold the rest. The project would need 15,000 acres of land.

The Maharashtra government, the officials said, wants the three oil companies and the oil ministry to reduce the land requirement for the refinery.

One of the three officials mentioned above said on condition of anonymity, that the state government is trying to persuade petroleum ministry officials to scale down their expectations.

“Finding 15,000 acres of contiguous land in Konkan is quite a task. During the two visits that the petroleum ministry team made to Konkan, we tried to persuade them to scale down the target to 6,000 or 8,000 acres. We will need to find a realistic balance between the land requirement and the ground situation in Konkan,” the official said. 

The oil marketing companies (OMCs) will form a special purpose vehicle (SPV) for the project, oil minister Dharmendra Pradhan said on 6 June. 

An official from the refineries division of one of the OMCs, the second of the three officials mentioned above, said, “It has been decided to set up a committee with members of the Maharashtra government and oil marketing companies. The committee would travel to the Ratnagiri district later this month and stay there for a week or more to identify suitable land. There is a thought process that if we do not get 15,000 acres at one stretch, we should look at different land parcels within the same region for some refinery units.”

“The primary structure has been formed and we have offered the refinery to Saudi Aramco as a prospective partner. The Maharashtra government is also a partner in this project. They have found the land for us and our technical team is looking into the details of that,” Pradhan said. 

Emails sent to the three OMCs on the issue remained unanswered. 

Sanjay Sethi, chief executive officer of Maharashtra Industrial Development Corp. (MIDC), the agency tasked with identifying the land for the refinery, said a team from the petroleum ministry had visited Maharashtra and the Konkan region. “The team has looked at a few sites but it has not confirmed any particular location. They will have a few more visits and we may have some clarity in another fortnight or so,” Sethi said. 

“The technicalities of the venture have already been worked out. We have already come to an understanding as to what should be the model between us. Being the larger player, we will certainly have a larger share,” an IOCL official told Mint on 10 July, 2016. 

The OMCs have finalized the configuration and petrochemical linkages that the refinery will have. The government has appointed Engineers India Ltd as the technical agency to prepare a detailed feasibility report (DFR).  

As per an announcement made by Pradhan on 28 December, refinery construction was to begin by March 2017. But looking at the current land situation, the target seems too ambitious. The Maharashtra industry department official quoted above said he was “extremely skeptical” of this projection. 

The feasibility report can be prepared only after the allocation of land. Preparing a DFR takes nearly 8-10 months. Besides, environmental approvals, deliberations on financing options, tax concessions and various board approvals would also take time. “In no way can work on the refinery construction begin by March 2017,” said the second official quoted above. 

Procurement of land has been the biggest obstacle for BPCL and HPCL which have two refineries in Maharashtra—12 mtpa (BPCL) and 8 mtpa (HPCL)—located in Mumbai.  

The existing refineries of both HPCL and BPCL are landlocked. While BPCL decided to set up the Bina refinery in Madhya Pradesh to expand capacity to 15 mtpa, HPCL’s expansion has not received the necessary clearances. 

In 2010, HPCL had decided to build a 9 mtpa refinery in Maharashtra’s Ratnagiri district. A year later, a panel led by ecologist Madhav Gadgil categorized the entire hill range of Western Ghats as ecologically sensitive, putting its plan in jeopardy. The moratorium was applicable up to 2014. 

Another refinery planned by HPCL at Pachpadra in Barmer district of Rajasthan two years ago has not made progress either. IOCL, the nation’s biggest refiner, on the other hand, has been planning to set up a new refinery on the west coast for some years now.

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