Chennai: A subsidiary of the state-owned Indian Oil Corp. Ltd, Chennai Petroleum Corp. Ltd will invest Rs1,000 crore in fiscal 2010 to expand its refinery’s annual production capacity by 1 million tonnes (mt) and revamp its fuel production facility, a top company official said.

Improving quality: Indian Oil Corp.’s Haldia refinery. The firm’s subsidiary, Chennai Petroleum, is looking to upgrade the quality of its petrol and high-speed diesel to meet Euro IV pollution norms.

Chennai Petroleum’s Manali refinery in Chennai currently has a capacity of 3mt a year. The proposed expansion by the end of 2009, costing around Rs200 crore, will help the company produce value-added products such as liquefied petroleum gas, naphtha and high-speed diesel.

As for upgrading the quality of its spirits and diesel, the move has been necessitated by India’s decision to implement the Euro IV emission and fuel norms in 11 major cities by 1 April. The rest of the country has to subscribe to Euro III norms by then.

The project, costing Rs2,615 crore, would serve Bangalore and Chennai. The first phase will be completed by the end of fiscal 2010.

Acharya added that Chennai Petroleum, formerly Madras Refineries Ltd, is revamping a production unit at an estimated cost of Rs273 crore to produce high-quality petrol. The process is expected to be completed by the end of 2009.

In addition to these, if talks with third-party petrochemical companies to sell propylene succeed, Chennai Petroleum plans to set up a new unit capable of producing 40,000 tonnes a year at a cost of around Rs350 crore.

The company is currently expanding capacity at its existing unit to 40,000 tonnes from 30,000-35,000 tonnes a year.

“We are scouting for interested parties who can take at least 40,000 tonnes of propylene per annum. If we get the interested parties, then we will go ahead with propylene expansion," said Acharya. He declined to name the companies the firm is in talks with.

Chennai Petroleum may also consider setting up more windmills for captive power generation, Acharya said. The company currently has a 17.5MW windmill in Coimbatore, Tamil Nadu.