NRL to increase refinery size

NRL increases capacity  for viability

ROOPAK GOSWAM

The Numaligarh Refinery Limited (NRL) is increasing its installed capacity from three to eight million metric tonnes per annum to make itself viable. “The expansion would cost between Rs 8,000 and Rs 10,000 crore and will be completed by the end of 2017 — the end of the 12th plan period,” NRL managing director Dipak Chakravarty told The Telegraph. Commercial production of the refinery, set up in accordance with provisions of the Assam Accord, started in October 2000. He said among others, the company had mooted a plan for importing crude to Numaligarh through a new pipeline from Dhamra port in Orissa. The length of the inter-state pipeline would be roughly 1,500km. A source in the company said an area of persistent concern for NRL was the inadequate availability of crude oil, which was unlikely to be addressed unless the possibility of processing imported crude was explored at the right earnest. The company will also be soon calling in tenders for preparation of a techno-economic feasibility report for the expansion plan. “There should not be any problem in getting 1,000 acres of land near our current premises,” Chakravarty said, adding that the resources required for executing the plan could be raised through a public issue. He said the demand projections for petroleum products during the 12th five-year plan supported the refinery’s capacity expansion plan in terms of product absorption. “If the plan materialises, the company would achieve an economical scale of operation in the next few years and this would pave the way for making the refinery viable,” he said. The capacity expansion plan has been discussed with officials from the ministry of petroleum and natural gas and the Planning Commission. The performance of the company in the 2010-11 fiscal was good, as it achieved the highest sales turnover of Rs 8,972 crore — a 13.9 per cent increase over last year’s figure of Rs 7,874 crore. The recent duty restructuring by the Centre has robbed the company of Rs 600 crore, a figure that would be reflected in next year’s balance sheets. “We have approached the Centre to look into the issue, because otherwise, we would be in the red,” Chakravarty said. The source said while the company had drawn up plans for improving profitability through implementation of several value addition projects during the course of the next few years, any measure to reduce excise duty benefits before implementation of the planned projects could threaten the company’s viability. The Centre’s move will also hit hard the three other refineries of the Northeast. The Centre has been offering 50 per cent excise duty benefit to the region’s refineries in view of inherent handicaps like their sub-economic sizes and restricted capacity utilisation owing to inadequate crude oil availability, among others. But recently, the customs duty on crude and high-speed diesel was reduced along with reduction in excise duty on high-speed diesel. This hit hard the region’s refineries, which had to cope with reduced profits in terms of their share of the duties. NRL’s profit before tax was recorded at Rs 415 crore, while the profit after tax was Rs 279 crore during the 2010-11 fiscal. EOM