BPCL seeks Rs 8,800-cr grant for expansion at Numaligarh refinery

Written by Siddhartha P Saikia | New Delhi | Updated: Aug 21 2014, 06:52am hrs
State-owned refiner BPCL has sought a

Rs 8,800-crore capital subsidy grant from the central government to expand its Numaligarh refinery in Assam, from the current capacity of

3 million tonne per annum (mtpa) to 9 mtpa. This is in the wake of Modi presenting a comprehensive vision for the overall development of the Northeast.

The expansion of the refinery, owned 61.65% by BPCL, would cost Rs 16,600 crore, which means the capital subsidy sought would amount to 53% of the project cost. This

also includes laying a 1,350-

km pipeline to ferry

crude from the east coast to

the refinery.

S Varadarajan, chairman and managing director of BPCL, in a recent communication to petroleum secretary Saurabh Chandra said that considering the enormous benefits that this investment would yield, there is a need to support the project with a financial package.

Earlier, 53% capital subsidy was offered for upcoming GAIL (India)-promoted Brahmaputra Cracker and Polymer (BCPL) at Dibrugarh in Assam. Now, BPCL too wants a similar subsidy grant of 53% of the project cost. Also, it is seeking extension of excise duty relief for the expanded capacity of NRL for 20 years.

With both these incentives, the project will be viable. It needs to be mentioned that during the last decade all refinery projects in India (both greenfield as well as major expansions) have been given financial assistance from Centre as well as the respective states, Varadarajan told the petroleum secretary.

Petroleum secretary Chandra is learnt to have sought details on the feasibility report of the project and whether the expansion plan has been approved by the boards of BPCL and NRL.

The expansion of NRL assumes importance in the background of Modis 'Look East' policy. Laying of a product pipeline from Siliguri in India to Partapur in Bangladesh would be possible due to enhanced product availability after the expansion of the Numaligarh refinery. This could facilitate export of around 1 mtpa diesel to Bangaldesh and open opportunity of enhanced bilateral trade relations with Bangladesh. In addition, expansion at the Numaligarh refinery would open petroleum products export opportunities to Myanmar.

Already, NRL has proposed to set up a 100 mw plant in joint venture with Cement Corporation of India (CCI). This plant will use raw petroleum coke to be produced in the refinery after the expansion. The power plant would be located within the premises of the existing CCI cement factory at Bokajan, which is around 60 km from the Numaligarh refinery.

The proposed 1,350-km crude oil pipeline could also help other refineries in the state, such as Bongaigaon and Guwahati run by Indian Oil Corporation (IOC).