Thursday, January 17, 2019

Cabinet approves trebling of Numaligarh refinery capacity at Rs 22,594 crore: Report

THE Cabinet Committee on Economic Affairs today approved trebling of Numaligarh Refinery Ltd’s (NRL) capacity to 9 million tonne per annum (mtpa) at a cost of Rs. 22,594 crore. The expansion project at Morangi in Assam’s Golaghat district will help augment the crude availability for the region’s refineries and meet the deficit of petroleum products in the north east, says a government release.
The project involves setting up of a crude oil pipeline from...
Paradip in Odisha to Numaligarh and a product pipeline from Numaligarh to Siliguri in West Bengal. The project is to be completed within 48 months, after approval and receipt of statutory clearances.
The total project cost of will be financed by a mix of debt, equity and Rs. 1,020 crore in viability gap funding (VGF). A debt of Rs. 15,102 crore will be raised by NRL which will also deploy Rs. 2,307 crore via internal accruals. The promoters, Bharat Petroleum Corporation Ltd, Oil India Ltd and Government of Assam will contribute to equity.
The Numaligarh expansion is part of the government’s ‘Hydrocarbon Vision 2030 for the North East’. The objectives of the 2030 Plan are to leverage the region’s hydrocarbon potential, enhance access to clean fuels, improve availability of petroleum products, facilitate economic development and to link common people to the economic activities in this sector.
The vision focuses on pipeline connectivity for carrying liquefied petroleum gas (LPG), natural gas, petroleum products, oil and lubricants (POL); building refineries and import links; and development of compressed natural gas (CNG) highways and city gas distribution network.
The states covered include Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura.
The Narendra Modi-led government is expected to sign off on the expansion plan that includes a viability gap funding (VGF) and tax concessions from the Centre as the ruling party pushes ahead with its aim to woo voters in the North-East with mega projects in the run-up to the general elections.
Numaligarh Refinery Ltd, 61.65 per cent owned by Maharatna PSU BPCL, currently refines 3 mt of crude a year. The refinery was set up in 1999 following the Assam Accord.
Oil India Ltd holds a 26 per cent stake in the refinery with the Assam government holding the balance equity. The joint venture partners are treating the expansion as a separate project having a different configuration from the existing refinery, a government official said. “The proposal has secured full support of the Petroleum and Finance ministries. So, the cabinet approval is a mere formality. Since it is a project in the North-East, there will be a lot of push from the government,” the government official said. BPCL confirmed the plan.
Oil refiners are facing difficulties in supporting demand in the North-East where the growth has outstripped other regions. “Because, the growth is so fast in the North-East, we were trying to expand capacity to ease the market,” the official said. The refinery will also supply products to Bangladesh.
Maharatna PSU Indian Oil Corporation Ltd (IOCL), meanwhile, will raise the capacity of the LPG bottling plant at its Bongaigaon Refinery, also in Assam, chairman Sanjiv Singh said last week. The enhanced LPG production capacity at the refinery will be commissioned this year, he said, adding this will increase the LPG production in the North-East five times.
The shipping ministry, meanwhile, has submitted a proposal to the finance ministry for augmentation of navigation capacity of national waterway 2 (NW-2 on river Brahmaputra) in Assam with technical and financial assistance from the World Bank, on the lines of the Jal Marg Vikas project on NW-1.
A scoping mission of the World Bank visited NW-2 and NW-16 (also in Assam) during December 10-14, 2018, according to a ministry document. BusinessLine reported this development on December 18, saying the World Bank was looking to lend more than $100 million to the Inland Waterways Authority of India (IWAI) for developing NW-2.

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