The company, it may be recalled, is already in the process of effecting an increase in capacity to nine million tonnes from the current three million tonnes. This is expected to be done by the end of 1999 and will cost Rs 3,690 crore for which funding is nearly complete.

The decision to go in for a further increase in capacity to 12 million tonnes will, to a large extent, be determined by the fact that the company will not be setting up a power plant. "There is enough residual oil to set up a 500mw plant, but this cannot be done for a host of factors ranging from environmental hurdles to other basic policy problems," officials said. Hence, any expansion would need to factor in this issue and focus on producing other value-addedproducts.

MRPL would then look at a mix that would involve greater output of high- speed diesel (HSD), motor spirit (MS), superior kerosene oil (SKO) and liquefied petroleum gas (LPG). The expansion would then be warranted as there would be tremendous revenue potential from sale of these products which are perennially in demand.

Officials also reiterated that the proposed expansion, if found feasible, would be implemented only after 2002. By this time, the oil sector will have been completely deregulated and a 12-million-tonne refinery with prime products would be a formidable force to reckon with.

This would also then become HPCL's biggest refinery, with the second being the Punjab project which has earmarked a capacity of nine million tonnes. The facility at Vizag is also going in for an expansion to 7.5 million tonnes from 4.5 million tonnes which means that if everything goes according to plan, HPCL's total refining capacity five years from now will be 34.5 million tonnes.

"This is an absolutelycomfortable figure in a deregulated environment and with its over 4,000 retail outlets, HPCL is well placed," experts say. The company would, therefore, have no need to look for additional products from stand alone refiners like Madras Refineries and Cochin Refineries. This is also believed to be the view of the Nitish Sengupta Committee which is presently undertaking a study on restructuring the Indian downstream oil sector.

Mention may also be made of the fact that MRPL could rightly be termed as the first successful joint venture project in the refinery sector. The company, sources say, has clearly chalked out its priorities and, apart from merely expanding capacity, is keen on creating a separate marketing network which would supplement HPCL's efforts. It is also getting set to import crude on its own by mid-1999, instead of depending on the Indian Oil Corporation.

MRPL's increase in capacity to nine million tonnes will be preceded by a 67.5 MW captive power plant for the refinery. It already has a45mw plant and the total 112.5mw is enough to meet the power requirements of a nine-million-tonne refinery. A separate company release states that for the capacity expansion, MRPL has retained the Japanese consortium of Toyo Engineering, Mitsui & Co and Mitsubishi Corporation, which helped the partners in commissioning the first phase of three million tonnes.