Visa woes may delay IOC’s Paradip refinery

Visa woes may delay IOC’s Paradip refinery
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First Published: Sun, May 02 2010. 08 00 PM IST
Updated: Sun, May 02 2010. 08 00 PM IST
New Delhi: After the power sector, it is the turn of oil refining to suffer due to the government’s new limits on the number of overseas workers.
State-run Indian Oil Corp. Ltd (IOC), the country’s largest refiner, is lobbying with the government to lift the cap of 20 visas per project as the restriction threatens to delay the commissioning of its new refinery at Paradip, Orissa.
IOC needs a number of overseas experts for setting up the refinery, with a capacity of 15 million tonnes per annum (mtpa), at a cost of Rs29,777 crore.
The crude distillation unit of the project is slated to be commissioned by March 2012, and the overall project by November that year.
“There will be an impact on the Paradip refinery project due to visa issues,” said B.M. Bansal, chairman of IOC.
B.N. Bankapur, director of refineries at IOC, said the ministry of petroleum and natural gas, under which the firm operates, has raised the issue with the government. “We are facing problems due to this cap in the number of visas, that has led to productivity loss,” he said.
IOC has an installed capacity of 60.2 mtpa from 10 refineries. It expects the new plant to help meet new fuel emission standards, process more low-quality crude and tap export markets in South-East Asia.
India has emerged as a major Asian refining hub, with an installed capacity of 177.97 mtpa through 19 refineries, and is exporting petroleum products worth $25 billion (Rs1 trillion) a year.
The country is aiming for a refining capacity of 255.78 mtpa by 2012, but a delay in commissioning the Paradip refinery may undercut this target.
The visa cap is already hurting the power sector. The latest case was the cancellation of a contract awarded to China’s Shandong Electric Power Construction Corp., or Sepco, by Indiabulls Power Ltd for its Amravati project, as reported by Mint on 19 March.
Though the number of work visas allowed per electricity generation project has been doubled to 40 at the behest of the power ministry, a shortage of Chinese workers is still stalling the construction of some power plants.
“The timely delivery of energy and infrastructure projects requires efficient access to the global workforce—drillers, engineers, divers,” said Gokul Chaudhri, partner at audit and consulting firm BMR Advisors.
“India should continue to build its capabilities and capacity without imposing visa constraints as these hurdles can cause project delays in the short term and limit skill transfer opportunities in the medium to long term,” he added.
IOC registered a net profit of Rs2,950 crore on revenue of Rs2.85 trillion in 2008-09. From April-December, it earned a profit of Rs4,664 crore on a revenue of Rs70,415 crore.
The company’s under-recovery for the nine months was Rs7,936 crore, after taking into account upstream discount and oil bonds.
utpal.b@livemint.com
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First Published: Sun, May 02 2010. 08 00 PM IST