New Delhi: State-owned Hindustan Petroleum Corp Ltd (HPCL) plans to invest Rs 37,000 crore in setting up a nine million tonne oil refinery and a petrochemical complex at Barmer in Rajasthan.
The company will on March 13 sign a Memorandum of Understanding (MoU) with the Rajasthan government for setting up the refinery-cum-petrochemical complex, a source privy to the development said.
HPCL board earlier this week approved setting up of the complex costing Rs 37,000 crore. Also, it approved expansion of the Bhatinda refinery in Punjab from 9 million tonne to 11.2 million tonnes.
The Bhatinda refinery is operated by HPCL-Mittal Energy Ltd, an equal joint venture of HPCL and steel baron Lakshmi Mittal. HMEL had last year commissioned the Rs 21,500 crore Guru Govind Singh refinery at Bhatinda.
HPCL and Mittal Energy Investment Pte Ltd, Singapore, an L N Mittal Group Company,hold a 49 percent stake each in HMEL, while the remaining 2 percent is with financial institutions.
Sources said half of the crude oil requirement at the proposed refinery at Barmer is to come from the neighbouring oilfields of Cairn India. The rest will be imported crude.
The MoU signing in Jaipur will be attended by Oil Minister M Veerappa Moily and Rajasthan Chief Minister Ashok Gehlot.
HPCL, they said, has asked the state government to extend fiscal benefits like the ones extended by Gujarat and Orissa to new refinery projects, to make the Barmer unit viable. The concessions include 50 percent exemption in excise duty and the state government picking a small stake in the project.
Originally, state-owned Oil and Natural Gas Corp (ONGC), which owns 30 percent interest in the Barmer oilfields of Cairn India, had in 2005 committed to build the refinery but later started soft-peddling the project.
Last year, HPCL entered the fray and has proposed to take 51 percent stake in the project. ONGC, which originally had the authorisation from the government for processing the Barmer crude at the proposed refinery, too is now keen to take a stake in the project.
Cairn India, which holds 70 percent interest in the fields, currently produces about 175,000 barrels per day oil (8.75 million tonnes a year) from the Rajasthan fields and has potential to go up to 300,000 bpd (15 million tonnes).
Vedanta Resources, which in 2011 acquired Cairn India for USD 8.67 billion, too is interested in taking a small equity of 2-3 percent in the project.
Sources said Rajasthan government has started the process of land acquisition of about 926 hectares.