Greenfield refinery in TN to meet fuel supply shortfall?

Report says State needs eight million metric tonnes per annum of motor spirit

Published: 22nd August 2016 05:29 AM  |   Last Updated: 22nd August 2016 05:29 AM   |  A+A-

CHENNAI: Expecting a fuel shortage in Tamil Nadu and other parts of South India, a report on logistics bottlenecks by the Shipping Ministry proposed setting up a new refinery in the central part of the State, near the coast between Cuddalore and Karaikal. Besides Tamil Nadu, a greenfield refinery is also being planned in Maharashtra.

The report, Final Traffic Projections and Logistics Bottleneck, prepared by the ministry with the Indian Port Association as a part of its Sagarmala project, states that Tamil Nadu needs eight million metric tonnes per annum (MMTPA) of motor spirit or high speed diesel. This is expected to rise to 15 MMTPA by 2025. The report says the Centre is working on a two-fold strategy to bridge India’s shortfall of 12-13 million metric tonnes a year. First, by creating additional refineries, and then by redistributing supply to set right regional supply-demand imbalances through increased coastal shipping to the south and additional pipelines to move the product to deficit areas in the north.

Creating additional capacity is the first step. At present, the State has only two refineries: Chennai Petroleum Corporation Ltd runs one at Manali near Chennai and another at Cauvery basin near Nagapattinam with capacities of 10.50 and 1 MMTPA respectively. However, the actual supply is only 7 MMTPA, resulting in a deficit of 1 MMPTA, says the report.

The third refinery being built at Cuddalore, a joint venture between Nagarjuna Group and Tata, is to meet the present and projected demand, but the project has been delayed. As the CPCL plant in Chennai is in the interior of the city, it cannot be expanded due to environmental and safety concerns. A new refinery with a capacity of 5-7 MMPTA is being recommended between Cuddalore and Karaikal by 2018 with a ramp up potential of 3-5 MMTPA, the report says.

Gujarat is the refinery hub with a surplus of about 20 MMPTA. This can be redistributed to areas in the North and Maharashtra through coastal shipping and pipelines. Redistribution from Kochi to Chennai and Odisha to Andhra Pradesh by ship will address the deficits, adds the report.

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