The proposed 9 million metric tonnes per annum (mmtpa) greenfield refinery in Nagapattinam, Tamil Nadu — a joint venture between state-run Indian Oil Corporation Ltd (IOCL) and Chennai Petroleum Corporation Ltd (CPCL) — may face further delays as it undergoes reconfiguration.
The reconfiguration is being done to ensure that the refinery is more suited to meet India’s current petroleum product and petrochemical demand, a senior government official told Moneycontrol. The configuration of a refinery determines the types of crude oil the plant can process, the range of products it can produce, and the overall efficiency and complexity of the unit.
The related study for the reconfiguration is expected to be completed within a year, after which the companies will start building the integrated refinery and petrochemical plant along the Cauvery basin in Tamil Nadu.
The commissioning of a refinery usually requires at least three to five years, the official said, hinting at completion of the project by 2030-31. CPCL had earlier aimed to build the refinery by 2027 — already two years behind the original schedule, according to a Reuters report.
“The new configuration will ensure better viability of the refinery. It will re-assess which (petroleum) products and petchem, such as kerosene, jet oil, etc, are more in demand in the country and what should be produced by the refinery to meet that demand. We need to build refineries which are more viable — configured around demand,” the official said.
While IOCL had earlier announced the capacity of the refinery to be 9 mmtpa, the official said the final capacity of the refinery would be decided post re-configuration studies.
Confirming the development, H. Shankar, managing director of CPCL told Moneycontrol that it also seeking approval for higher incentives from the Tamil Nadu government based on reconfiguration of the refinery as some of the new petrochemicals come under GST regime.
"According to earlier plans, we were looking at increasing petrochemical capacity in the second phase of the project. But now, instead of only a polypropylene (PP) plant, we have decided to increase downstream elements such as HDPE, LDPE and PVC, etc. in the upcoming project," said Shankar.
The investment required for the project is also being re-worked, in a way that the cost does not go up significantly. After all the required approvals, the companies will try to commission the refinery in 39 months, added Shankar.
CPCL is an IOCL subsidiary in which the latter holds a 51.89 percent stake.
Project details
Prime Minister Narendra Modi had laid the foundation stone for the Cauvery Basin Refinery at Nagapattinam in February 2021.
IOCL’s board of directors in December 2021 approved the setting up of a 9 mmtpa refinery at an investment of Rs 29,361 crore, forming a joint venture company with CPCL — Cauvery Basin Refinery and Petrochemicals Ltd (CBRPL). In the JV, IOCL and CPCL held 50 percent equity, while the balance 50 percent was to be held by financial/strategic/ public investors.
The project was then expected to be completed within 48 months from the dates of investment approval and statutory clearances, IOCL had said.
Later, in March 2024, the board of IOCL raised its stake in the joint venture to 75 percent, while also revising the project cost upward by 12 percent to Rs 33,023 crore. The remaining 25 percent equity was held by CPCL.
The company has already acquired land and has also received the required environmental clearances for the project.
Apart from Hindustan Petroleum Corporation Ltd’s (HPCL) Rajasthan refinery which is expected to be commissioned by the end of 2025, the Nagapattinam petrochemical project is India’s latest announced greenfield refinery project.
IOCL operates nine refineries across the country, while CPCL runs a 10.5 mmtpa refinery in Chennai.
India expands refining capacity
Amid India’s rising energy demand, the country aims to increase its refining capacity to 450 mmtpa by 2030 from around 250 mmtpa currently. Working towards this objective, state-run oil marketing companies have been setting up new refineries while also expanding the capacities of their existing plants.
IOCL, which has the largest refining capacity in the country, is expanding the capacity of its Panipat refinery to 25 mmtpa from the current 15 mmtpa.
Bharat Petroleum Corporation Ltd (BPCL) is setting up a 9 mmtpa greenfield refinery in Andhra Pradesh while also expanding the capacity of its Bina refinery to 11 mmtpa from 7.8 mmtpa currently.
Besides setting up a greenfield refinery in Rajasthan’s Barmer, HPCL also plans to enhance the capacity of its Visakhapatnam refinery to 15 mmtpa from the current 13.7 mmtpa.
(The story was later updated with CPCL response.)
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