HPCL In Talks To Pick Up Stake In Bina Refinery

New Delhi, March 28 | Updated: Mar 29 2004, 05:30am hrs
State-run Hindustan Petroleum Corporation Ltd (HPCL) is in talks with Bharat Petroleum Corporation Ltd (BPCL) to pick up stake in the Rs 6,354-crore Bina refinery in Madhya Pradesh to secure a permanent source of petroleum products for its operations in central India. HPCL is in dialogues with BPCL for taking equity stake in Bharat Oman Refinery Ltd (Borl the company executing the Bina refinery project). Nothing has been finalised as yet, industry sources said.

Of the six million tonne products Bina refinery will produce annually, HPCL has indicated a requirement of 1.4-1.6 million tonne of petrol, diesel, LPG and kerosene for marketing in Madhya Pradesh.

Bina refinery, where BPCL holds 51 per cent stake, is slated for completion in the second half of 2008. Oman Oil Company holds about two per cent interest and the remaining equity is to be offered to a strategic partner.

Of the 6 mt products Bina refinery will produce annually, HPCL has indicated a need of 1.4-1.6 mt of petrol, diesel, LPG and kerosene for MP
Product slate is being revised to produce more of LPG and based on the revised product configuration, HPCL and BPCL will arrive at a producing sharing agreement. After that, BPCL will indicate the equity it can give HPCL, they said.

Meanwhile, Borl has asked the Madhya Pradesh government to defer local sales tax on sale of products within the state by at least 11 years (from the date of commissioning of the refinery), as has been granted by the Orissa government for Indian Oil Corporations Paradip refinery.

Besides, it has also sought exemption from electricity duty and cess for operation of the refinerys captive power plant.

Concessions from the state are necessary to help the refinery tide over the problems of initial years, especially when investments of such large nature are at stake, a source said.

Madhya Pradesh has an effective local sales tax of 28.5 per cent on petrol and diesel and 12 per cent on LPG and naphtha. Kerosene is exempt from the levy. The Gujarat government deferred local sales tax for Reliance Industries Jamnagar refinery for 15 years.

BPCL has till now spent Rs 155.77 crore on the project, which also comprises a crude oil import system consisting of a single point mooring system (SPM) and crude oil storage terminal at Vadinar in Gujarat and a 943-km long crude oil pipeline from Vadinar to Bina.

Land for the refinery and crude oil terminal and townships has been acquired. Right of user/ right of way for the entire 935-km pipeline has been acquired. The project was sanctioned as a Jv between BPCL and Oman Oil Company (OCC) but OCC in February 2001 decided not to invest further in the project and BPCL took up the project on its own.

The project will be completed in 42 months, the source said adding, work has also begun on the Rs 463.40 crore marketing terminal at Bina which comprises facilities to store 205,000 kl of white oil, 51,000 kl of black oil, 8,100 tonne of LPG and 31,420 tonne of Bitumen.