Murli Deora reviews Bhatinda refinery Implementation; asks promoters to set up refinery on fast track

The Petroleum Minister Shri Murli Deora has said that that his priority is to see the completion/commissioning of this project rather than laying its foundation stone. Addressing a delegation of the Members of Legislative Assembly of Punjab led by Ms. Rajinder Kaur Bhattal, Leader of Opposition in Punjab Legislative Assembly, here today, he said that the way forward for implementation of Bhatinda Project has been found with steadfast commitment of UPA chairperson Smt. Sonia Gandhi and the Prime Minister Dr. Manmohan Singh to the project for development of Punjab. He asked the promoters of Bhatinda refinery to expedite setting up this project on fast track. The delegation had called on Shri Deora to convey their appreciation for his efforts to encourage participation of M/s. Mittal Investment as joint venture (JV) partner in Bhatinda Refinery Project.

Government on 21st June 2007 approved the proposal of Mittal Energy Investments Pvt. Limited (MEI), a 100% subsidiary of M/s. Mittal Investments(MI) to own 49% equity as Joint Venture (JV) partner in M/s. Guru Govind Singh Refinery Ltd. (GGSRL) which was earlier incorporated as 100% subsidiary of Hindustan Petroleum Corporation Limited (HPCL) for setting up Bhatinda Refinery. HPCL will hold 49% and Indian financial institutions(IFIs) will hold balance 2% equity. Equity investment by HPCL and MI (through MEI) comes to Rs.3506 crore each and by IFIs Rs. 143 crore.

With Government’s nod for participation of Mittals, Shri Deora said, decks have been cleared for implementation of this important project. He also took stock of the steps contemplated by the promoters to put implementation of refinery on a fast track. Shri Deora recalled the significant contribution of the Government of Punjab which signed a Deed of Assurance in August 2005 extending tax concessions for Guru Gobind Singh Refinery. This is a critical input for viability of the Rs.19,000 crore refinery project. Shri Arun Balakrishnan, CMD HPCL and Shri B.S. Sant, MD GGSRL made a detailed presentation on the steps planned to be taken to put the project on fast track.

The project did not make the desired progress in the past for various reasons, even though its foundation stone was laid way back in 1988. Previous efforts to solicit participation of corporate entities did not bear fruit despite HPCL approaching several Multi National Companies (MNCs) during last ten years. In one case the company had even signed an MoU with British Petroleum to join as JV partner.

The investment by MI of Rs. 3506 crore (or about 5% of total FDI in 2006-07) is the first and the largest Foreign Direct Investment (FDI) brought into the petroleum refining sector in collaboration with a PSU. The investment is the second largest FDI in the energy sector and the third largest ever that the country has received.

The project itself was earlier approved by CCEA with permission to induct JV partner if so required subsequently. It consists of a 9 million metric tonne per annum (MMTPA) refinery, 1000 KM crude oil pipeline from Mundra(Gujarat) to Bhatinda and Single Point Mooring (SPM) & crude oil terminal at Mundra. The ‘As built’ cost assessed by SBI Caps is Rs. 18,919 crore.

The project will create a lot of jobs directly and indirectly in the State of Punjab. This will give a boost to industrialization and development of ancillary industries. It will also improve the distribution efficiency of petroleum products in the North West region. Further, it will enhance the national capabilities of providing latest quality/environment friendly products.

Source : Press Information Bureau

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