HPCL plans 25% stake in $30 bn refinery on west coast

New Delhi: Hindustan Petroleum Corp Ltd plans to take 25 percent stake in the USD 30 billion mega oil refinery planned to be set up on the west coast, the company's chairman Mukesh K Surana said today.

"HPCL Board at its meeting today decided to participating in the 60 million tons a year refinery in Maharashtra. We intent to putting in 25 percent equity," he told reporters here.

Indian Oil Corp (IOC) will hold 50 percent stake in India's biggest oil refinery, while the balance 25 percent will be with Bharat Petroleum Corp Ltd (BPCL).

"We are open to getting a strategic partner but that will be decided later. For now, we have decided to participate in the project with 25 percent stake," Surana said.

The 60 million tonnes a year refinery and a mega petrochemical complex will be set up in two phases.

Phase-1 will be 40 million tons together with an aromatic complex, naphtha cracker and polymer complex. This will cost Rs 1.2-1.5 lakh crore and will come up in 5-6 years from the date of land acquisition.

The mega complex will require 12,000-15,000 acres of land and two-three sites on coast of Maharashtra are being explored. "We have so far not finalised the land. Talks are on," said the HPCL chairman.

The second phase, involving a 20 million tons refinery, will cost Rs 50,000-60,000 crore.

IOC has been looking at west coast for a refinery as catering to customers in West and South was difficult with its refineries mostly in the North.

HPCL and BPCL too have been looking at a bigger refinery because of constraints they face at their Mumbai units.

The mega west coast refinery will produce petrol, diesel, LPG, ATF and feedstock for petrochemical plants in plastic, chemical and textile industries in Maharashtra.

Fifteen million tonnes a year is the biggest refinery any public sector unit has set up in one stage. IOC recently started its 15 million tonnes unit at Paradip in Odisha.

Reliance Industries holds the distinction of building the biggest refinery in India till now. It built its first refinery at Jamnagar in Gujarat with a capacity of 27 million tonnes, which was subsequently expanded to 33 million tonnes. It has built another unit adjacent to it for exports, with a capacity of 29 million tonnes.

The refinery being planned by the state-owned firms will be bigger than that. The phase-1 itself will be bigger than any one single unit.

India has a refining capacity of 232.066 million tonnes, which exceeded the demand of 183.5 million tons in 2015-16 fiscal.

According to International Energy Agency (EA), this demand is expected to reach 458 million tons by 2040.

Surana said HPCL was talking to the Rajasthan government for fiscal incentives for setting up a 9 million tons refinery at Barmer at the cost of up to Rs 50,000 crore.

"Viability gap funding will definitely be required. Whether it is in form of tax concessions or grant, those are things being discussed," he said.