Rs 16,000 cr Bathinda refinery cleared
Tribune News Service

NEW DELHI, Nov 4 — Punjab’s single largest Central sector project, a Rs 16,000 crore grassroots refinery project at Bathinda, has overcome all obstacles and is set to take off on November 11, when the Prime Minister, Mr Atal Behari Vajpayee, lays the foundation stone for the joint venture between Hindustan Petroleum Corporation Ltd and Punjab State Industrial Development Corporation.

"We have secured all clearances and now only a formal nod from the Union Cabinet is awaited for the Rs 16,000 crore project to take off" a beaming Punjab Chief Minister, Mr Parkash Singh Badal, announced here today.

Mr Badal’s announcement followed a late night decision of the Public Investment Board to clear the project, which was earlier threatened with derailment following objections from the Planning Commission and vested interests opposed to the setting up of the grassroots refinery. A reputed industrial house harbouring ambitions of having a monopoly control in the petroleum sector was reported to be behind the moves to thwart the prestigious project.

That there were several obstacles in the way of the project was evident as the Public Investment Board, chaired by the Revenue Secretary, Mr E.A.S.Sarma, and attended among others by the Adviser, Project Appraisal and Monitoring Division in the Planning Commission, and the Petroleum Secretary, had to hold several meetings spread over a week before giving the clearance. The Planning Commission’s contention was that the project was economically unviable as it would be difficult to find a ready market for the various petroleum products supplied by the proposed refinery.

Mr Badal, however, said the setting up of the refinery, which has a capacity of nine million metric tonnes per annum (MMTPA), would usher in a new era of economic development in the state. It would serve as a catalyst to generate direct and indirect employment for more than 15,000 persons besides, providing a fillip to the state’s transport sector, Mr Badal said. The refinery would also benefit the farmers by ensuring easy availability of diesel for tractors. It would also help in development of other industries such as power, petrochemicals and small scale ancillary units.

The setting up of the mega-project at Phulo Kari village in Bathinda district is a step forward for the state as the only other project of this size in Punjab is the Bhakra Nangal dam.

The major facilities envisaged in the project include the nine MMTPA grassroot refinery, a 1006-km crude oil pipeline from Bathinda to Mundra in Gujarat, crude import facilities, including single point mooring (SPM), and a crude oil terminal.

The Committee of Public Investment Board had approved the proposal for the preparation of a detailed feasibility report (DFR) for the setting up of a six million tonnes per annum grassroot refinery at Bathinda two years ago on December 31, 1996. It was subsequently enhanced to nine million tonnes per annum.

The first stage approval of the Government of India for preparation of DFR at an estimated cost of Rs 30 crore was received on February 3, 1997.

The DFR was prepared by an international consultant ABB Lummus Global and was submitted to the Union Government for Stage 11 approval in December 1997.

The grassroot refinery project is expected to cost Rs 10889 crore at the June 1998 prices, inclusive of a foreign exchange requirement of Rs 3811 crore. The project is scheduled for completion within 48 months from the date of the final government approval and yields a rate of return of 18.73 per cent. The foreign exchange savings estimated on account of this project is Rs 1859 crore. Mr Badal said plans were also afoot to set up a power project at the site and this was the reason for the escalation in the cost estimates.

The Punjab Government has already made land available to the HPCL after clearing the proposal in October, 1996. The Defence Ministry gave its clearance on January 12, this year.

According to official sources, the company has secured all environment approvals from the State Pollution Control Boards for the refinery as well as the crude oil pipeline.

The setting up of the refinery is also significant for the country as the consumption of petroleum products was approximately 85 million tonnes per annum in 1997-98. With the growth in the economy, the product demand is expected to increase to a level of approximately 112.8 MMTPA by the terminal year of the Ninth Plan (2001-02) and further to a level of approximately 155.3 MMTPA by the end of the Tenth Plan (2006-07). Considering the requirement of 4.2 MMTPA of Naptha demand for power projects, the estimated total demand of petroleum products becomes 117 MMTPA and 159.5 MMTPA in 2001-02 and 2006-07, respectively.

The refining capacity in the country at the beginning of the Ninth Plan was 61.55 MMTPA. Based on current assessment, the total refining capacity in the country by the end of the Ninth Plan in the year 2001-02 is expected to be 113.95 MMTPA and 142.74 MMTPA in 2006-07.

The proposed Punjab refinery is planned to be commissioned in 2003-04 and even with the commissioning of this, the product deficit in the country is projected at 13.6 MMTPA in 2003-04 and 33.4 MMTPA in 2006-07. If the demand for liquid fuel for new power projects of 12,000 MW capacity is also included, the product deficits would be still higher.

The refinery would also benefit the northern region as it is projected to have a consumption of about 47 million tonnes in 2006-07. There are only two refineries of 14 MMTPA capacity—one at Mathura (8 MMTPA) and the Panipat refinery (6 MMTPA). The Panipat refinery expansion by 3 MMTPA is being proposed for first stage approval and is likely to be commissioned earliest by 2003-04. To partly meet this abnormally huge gap in supply and demand in the northern region, supplies from the Punjab refinery would be critical and important for the region, officials say.

The two joint venture partners — HPCL and the PSIDC — are contributing 26 per cent of equity each and the balance equity would be sought from the public, financial institutions, foreign institutional investors, NRIs etc.