SURAT: Indian Oil Corporation Ltd (IOCL), country's largest refiner will infuse Rs 16,500 crore to set up three downstream petrochemical complexes and is planning to pump in another Rs. 33,000 crore to expand its petrochemical capacity in three year’s time.
“We are looking at ramping up our existing refineries as we believe that the future refineries would entail better petrochemical output driven by robust demand. To cater to the demand we have three projects in Odisha worth Rs. 16,500 crore which are at various stages of implementation,” said IOC chairman Sanjiv Singh, on the sidelines of the textiles and plastics investors conclave, here on Sunday.
Giving a break-up of the plan, Singh said about Rs. 4,500 crore will go into projects such as Purified Terephthalic Acid (PTA), Rs. 10,000 crore will be for Mono Ethyl Glycol (MEG) and another Rs. 2,000 crore will go into setting up a polyester staple fibre (PSF) unit. The PSF facility is the second such downstream petrochem facility in Odisha, where IOC is also setting up a plastic park close to its refinery in Paradip. Besides, the oil marketing major has plans of setting up a Textiles Park in Odisha, in which the polyester fibre produced in PSF unit will be used as feedstock.
In addition, a polypropylene unit of 700 KTA (kilo tonnes per annum) would also be set up at its refinery complex, to support the plastic industry by supplying raw materials. Estimated to cost Rs. 3,150 crore, the plant is getting ready to be commissioned by December, this year.
Expansions are also planned at the firm’s Panipat refinery in Haryana, Koyali refinery in Gujarat, Barauni refinery in Bihar, Paradip in Odisha and Mathura refinery in Uttar Pradesh to produce Euro-VI emission norm compliant petrol and diesel by 2020 as against Euro-IV fuel being produced now. “We are looking at ramping up our newest refinery at Paradip in Odisha to 18 mtpa from current 15 mtpa. Overall, the capacity augmentation at various refineries will cost us around Rs 33,000 crore per annum and help us reach a refining capacity of around 115 mtpa in the next 12 years,” said Singh.
“The proposed petchem plants along with upgradation of refineries will serve as an alternative line of revenue and add to the firm’s gross refining margins,” said an expert tracking the sector, calling it a de-risking model.
Investment push
Addressing the conclave, Union minister Dharmendra Prasad urged investors in Surat to invest in the proposed textile and plastic park. “There is a huge opportunity to develop downstream industries in sectors such as petrochemical, plastic and textiles with convenient access to all the primary raw material needed. The region also has the necessary infrastructure, including ports, railway connectivity and road networks along with low-cost labour, that will facilitate the speedy development of the two sectors,” he said.
Notably, even as Odisha is scouting for potential investors for the downstream plastic park in Paradip, Kolkata-based Aradhana Plastics and Tidal Trading from Paradip have already done their groundbreaking at an estimated investment of Rs 60 crore. “With an annual installed capacity of 5,040 tonnes per annum, the estimated cost of Tidal Trading's project is Rs 20 crore, while Aradhana Plastics project cost is about Rs. 40 crore. Three more companies are in the pipeline which is expected to come on board by this year-end,” said Avinash Verma, executive director (Petrochemicals), Indian Oil.