HPCL to add 5 mt­petchem ca­pac­ity over five years

Resource Digest - - CONTENT -

State-owned oil re­finer HPCL plans to add up to 5 mil­lion tonnes of petro­chem­i­cal (mt­petchem) pro­duc­tion ca­pac­ity over the next five years. This would in­volve a sig­nif­i­cant por­tion of HPCL’S planned Rs.61,000-crore cap­i­tal ex­pen­di­ture for that pe­riod, CMD M K Su­rana said af­ter the com­pany’s an­nual share­holder meet­ing. HPCL’S pro­posed re­fin­ery in Barmer, Ra­jasthan, will be the first in­te­grated re­fin­ery in the coun­try, Su­rana in­formed, with both an oil re­fin­ing and a 2 mt­petchem pro­duc­tion ca­pac­ity built into the de­sign.

Be­sides this, the com­pany is in talks with the Andhra Pradesh gov­ern­ment to set up a 1.3 mt­petchem plant at Kak­i­nada along with GAIL. Ad­di­tion­ally, a li­cen­sor has been se­lected for the com­pany’s ex­ist­ing re­fin­ery in Bhatinda, Pun­jab, to set up petchem ca­pac­ity of 1.3 mt in the next cou­ple of years.

HPCL has also set up a petchem mar­ket­ing de­part­ment to find the best prices for its prod­ucts, Su­rana added.

PEER PLANS

The com­pany’s in­vest­ments in the petchem in­dus­try are in line with the plans of the other two state-owned oil re­fin­ers — In­dian Oil Cor­po­ra­tion and BPCL. BPCL has said it in­tends to in­vest Rs. 45,000 crore in petchem ca­pac­ity ex­pan­sion over five years while its larger coun­ter­part In­dian Oil Cor­po­ra­tion plans to in­vest Rs 32,000 crore. The in­vest­ment push comes as re­fin­ers ex­pect the de­mand for plas­tics, ad­he­sives and syn­thetic fi­bres to mul­ti­ply in the com­ing years even as the fu­ture of their tra­di­tional rev­enue streams from re­fined fu­els ap­pears shaky amidst the gov­ern­ment’s push for e-ve­hi­cles.

Also, petro­chem­i­cals are a good way for such com­pa­nies to “de­risk in the mo­tor fuel seg­ment,” ex­plained Su­rana. On ONGC’S pend­ing ac­qui­si­tion of the gov­ern­ment’s 51.1 per cent stake in HPCL, Su­rana said that the Cen­tre has formed an ad­vi­sory panel which will de­ter­mine the per share trans­ac­tion value of the deal. How­ever, HPCL will con­tinue to be a sep­a­rate en­tity af­ter the ac­qui­si­tion, he said. While he did not give a com­ple­tion date for the pro­posed new re­fin­ery in Barmer, Su­rana said that the re­vised plans for the long-pend­ing plant have a bet­ter tech­ni­cal con­fig­u­ra­tion and would be able to process a wider va­ri­ety of crude oils than be­fore.

Ear­lier this year, HPCL signed re­vised terms with the Ra­jasthan gov­ern­ment — a joint ven­ture part­ner in the re­fin­ery — los­ing many of the tax breaks that had ini­tially been promised. “How­ever, the in­ter­nal rate of re­turns re­mains about the same even un­der the new terms,” Su­rana said. “This is be­cause the ear­lier agree­ment was drafted when in­ter­na­tional bench­mark crude oil prices were at twice where they are now.”

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