1. After Supreme Court bans BS III vehicles, IOC Chairman V Ashok says ‘Cost of BS VI fuel will go up’

After Supreme Court bans BS III vehicles, IOC Chairman V Ashok says ‘Cost of BS VI fuel will go up’

B Ashok, chairman of India’s largest oil marketing company IOC, will retire at the end of May 2017 after serving the company for 37 years.

By: | Published: March 30, 2017 6:08 AM
In an interview with Saurabh Kumar, B Ashok talks about the plans he has for his successor.

B Ashok, chairman of India’s largest oil marketing company IOC, will retire at the end of May 2017 after serving the company for 37 years. He plans to stick around the company for a little while and has not made any immediate holiday plans. Ashok, who took over as IOC chairman in July 2014, may also consider an academic role. In an interview with Saurabh Kumar, he talks about the plans he has for his successor. Excerpts:

What are IOC’s plans for petrochemicals?

Over the last 10 years, we have been focusing on further value-additions in terms of downstream petrochemicals. We started with a LAB (linear alkyl benzene) unit in Gujarat, then we put a naptha cracker unit in Panipat. Today, we do 2.5 MT of petrochemicals and we are the second-largest in the market. We see great opportunities in this market.

Are there any future targets?

We certainly have some internal targets and many projects are already under implementation including one in Paradip. In-principle, wherever there is an opportunity to get more from the existing molecule, we will try to do that—it could be big projects or smaller ones. We are already doing do in smaller refineries in the north-east to large ones in Gujarat.

What about gas business?

We realise that natural gas is of importance to the country, the consumption proportion in the total portfolio is low. There is a need to improve the infrastructure of gas apart from introducing natural gas at several places. We have taken a position in the gas business and are setting up the first LNG regasification facility in Chennai. We are investing quite heavily in the natural gas business. Our current investment in natural gas will be around R18,000-20,000 crore on current projects. Going forward, it will increase as we have taken stakes in some of the regasification projects, there is one project coming up in Damra, and some other projects in the west coast. We will grow in all directions as a stable performance on a sustainable manner in possible only through being present across the value chain.

When will the Ennore project be ready?

It should be ready by end of calendar year 2018 and the public commissioning should happen by early 2019.

How is the refining business?

At the moment we are focusing on two areas. First is the brownfield expansion that we can go for, and in parallel there is a upgradation of fuel quality that is happening—that is BS IV and VI. We are reconfiguring our infrastructure to meet the quantity and quality requirements. We are looking at expanding our existing refineries—Mathura from 8 MT to 11 MT, Panipat from 15 MT to 20-25 MT, Barauni from 6 MT to 9 MT and Paradip we are looking to expand by at least 5 MT. Today, including Chennai Petroleum Corporation, we have a refining capacity of 80 MT will go up to 100-110 MT within the next five years.

What is the capex plan for the next financial year?

We will be spending around R20,000 crore in the next year. There are a lot of ongoing projects where expenditure will come and also the board has approved a number new projects. In the next five years, we will be spending around R1.8 lakh crore, this is without considering the west coast refinery project.

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How much more will BS VI fuel cost?

Better quality oil will mean that cost will go up, though I am not sure how more will cost per litre. However, given the size of the business, the per unit cost may not be too high. We should be ready with BS VI infrastructure by September 2019. We need to spend around R15,000 crore in our system. We have already committed to spend this money and it will happen in phases. The quantum will depend on when equipment is arriving and probably in the next two years the commitments will be a little higher. We are trying to be ready by September 2019. For some automobile companies, we have already given sample BS VI fuel for testing purposes. Higher quality oil will also mean cost will go up proportionately, but I am not sure how much more will it cost. Ultimately the cost will have to be borne, though I am not sure how much more cost per litre will be. However, given the size of the business, the per unit cost may not be too high.

We are trying to be ready by September 2019. For some automobile companies, we have already given sample BS VI fuel for testing purposes. Higher quality oil will also mean cost will go up proportionately, but I am not sure how much more will it cost. Ultimately the cost will have to be borne, though I am not sure how much more cost per litre will be. However, given the size of the business, the per unit cost may not be too high.

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