KOCHI: Public sector Bharat Petroleum Corporation Ltd (BPCL) has dumped its Rs 11,130 crore Polyols project in Kochi and is replacing it with a more promising Polypropylene project, senior officials said.
In a filing to stock exchanges early this month, BPCL had said the company was not pursuing the Polyols project due to revised cost estimates, which are much higher than the original estimate.
BPCL has decided to replace the Polyols with Polypropylene, which has a much bigger demand, especially in south India, an official who wished not to be named said. "We had only done land development so far at the project site," he said. BPCL is one of the PSUs put up for sale by the central government in its privatisation programme.
The central government had allotted 170 acres to BPCL in July 2019 by selling the ailing fertilizer public sector FACT land, which is lying adjacent to the oil refiner's Ambalamedu plant. BPCL planned to develop the Polyols project in a total of 340 acres -- the 170 acres of FACT land and another 170 acres it had taken on a long lease from Kinfra (Kerala Industrial Infrastructure Development Corporation)
Polypropylene (PP), also known as Polypropene, is the second-most widely produced commodity plastic (after polyethylene). Some of the finished products using Polypropylene are disposable syringes, plastic crates, toothbrushes, lunch boxes, buckets, bottle caps, containers, comb, etc. Sources said the investment for the Polypropylene project would not be as big as the Polyols project.
The scrapped Polyols project was approved by the BPCL's board in September 2018. It was developed further by carrying out activities such as an award for licensing of technology and related activities to licensors and appointing a project management consultant (US-based Fluor Corporation). Prime Minister Narendra Modi had laid the foundation stone for the BPCL's Polyols project in Kochi on January 27, 2019.
"During the development of the project, cost estimates with an accuracy level of +/-10% were prepared based on the front end, engineering design of the facilities. However, the revised cost estimates are much higher than the original estimate mainly on account of the increase in equipment and material cost," BPCL said. The PSU oil refiner said the increase in costs has adversely affected the project economics and hence its decision to "discontinue the Polyols project".