A Rs1.5 trillion mega refinery and petrochemical complex proposed by oil marketing companies (OMCs) will come up in Rajapur city of Ratnagiri district in Maharashtra, said two senior OMC officials aware of the development.
The OMCs and the Maharashtra government have been looking for land for the past 10 months, ever since Union oil minister Dharmendra Pradhan announced the project on 28 December 2015.
Rajapur is a city in the Ratnagiri district of Maharashtra, around 385km from Mumbai.
The OMCs—Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL)—plan to jointly build a 60 million tonnes per annum (mtpa) refinery at a cost of Rs1.5 trillion in two phases of 40 and 20 mtpa.
“The piece of land identified is exactly what we wanted. It is near a potential port and around 14,000 acres. We recently received a confirmation from the Maharashtra government that they have found the required land. Now MIDC (Maharashtra Industrial Development Corporation) will go ahead with the acquisition of this land,” said the first of the officials cited earlier.
Emails sent to the three OMCs on 28 October remained unanswered.
The second of the officials added that the land identified is only for the refinery. “We still need some piece of land to set up a jetty and a desalination plant for captive water supply. So we are looking for land for that,” he said.
Mint had reported in September that the OMCs and the state government were finding it difficult to find 15,000 acres of contiguous land in the Konkan region for the complex. Government officials had asked the OMCs to reduce the land requirement.
The first official cited earlier said around 20-30% of the land parcel identified is rocky and the OMCs may need to invest Rs10,000-15,000 crore to flatten this portion of land. “However, we are happy that the land that has been finalized,” he added.
The OMCs will form a special purpose vehicle for the project. While Indian Oil will hold a 50% stake, HPCL and BPCL will hold 25% each.
The official said they are keen on bringing in a strategic partner in the project and may rework the equity structure post that.
“Some international partners have shown interest in the project but they will participate only after we have some concrete plans in place (for the refinery) to present to them,” said the official.
Pradhan had said on 6 June that the refinery had been offered to Saudi Aramco as a prospective partner.
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).
The two OMC officials added that with the identification of the piece of land, the DFR can now be commissioned and that the report may take 8-10 months to prepare. Besides, the process for environmental approvals, deliberations on financing options, tax concessions and various board approvals can be put in place now.
An analyst with a domestic brokerage said, “India has been an exporter of petroleum products and its existing refineries are also being further expanded. Though the country’s own demand for petro products is growing at a fast pace and there is infrastructure development happening, it remains to be seen how far we will be able to absorb additional supply (of products).”