BPCL seeks fiscal concessions for Bina refinery

PTI Aug 20, 2003, 07.20pm IST NEW DELHI: Bharat Petroleum Corporation has sought fiscal concessions including sales tax deferment from Madhya Pradesh government to make its Rs 6,354 crore Bina refinery project economically viable. "Fiscal concessions are a must in order to ensure that the grassroot refinery gives an acceptable rate of return on investment," BPCL chairman and managing director S Behuria said. The company is seeking deferment of sales tax on refinery product for 15 years, waiver of entry tax on crude oil, relief in electricity duty and royalty on construction material and cut in customs duty on capital equipment. "Deferment of sales tax alone would save Rs 400 crore annually," he said, adding that Punjab and Orissa governments have given the concession to similar grassroot refinery projects in their states. Emphasising that Bina refinery was strategic to the company's growth plans, he said the project was being reconfigured in step with the changed demand-supply numbers and compulsion to produce eco-friendly fuels. "The Bina refinery was to have a base oil manufacturing facility, but this is now being produced at our Mumbai refinery; so the project has to be reconfigured," BPCL director (refineries) Mukesh Rohatgi said. The need to produce Euro-II complaint transport fuels too has triggered the change. He did not give any date for commissioning of the refinery, saying "we are carrying out an internal exercise to build the refinery in step with the lower than anticipated growth in petroleum product consumption. The country is already surplus in refining capacity and new refinery has to come up with increase in demand." Behuria said BPCL needed a refinery in the central and northern India to meet the supply requirements in the region. "We have refineries on the west coast (Mumbai), south (Kochi) and north-east (Numaligarh), but we don't have any supply source in the north. In that context, Bina is strategic to our plans," he said. He said BPCL's seven million tonnes Allahabad refinery would come up only after Bina as the pipeline transporting crude from Gujarat coast to Madhya Pradesh will further be extended to Allahabad.

"We have acquired 2000 acres of land near Allahabad, but work on the refinery would start after commissioning of the Bina refinery," he said, adding that the Bina refinery would come up during the 10th Five Year Plan Period (2002-07). "The Allahabad refinery is slated for 11th Five Year Plan and beyond," he said. Behuria said the Cabinet has already approved raising BCPL's equity in Bina refinery project to 50 per cent from 26 per cent. Its equity contribution would go up from Rs 549 crore to Rs 1271 crore. Oman Oil Company will hold about 2 per cent equity while the remainder is to be garnered from financial institutions and the public. So far, only Rs 150 crore has been spent on the project. The project has been delayed since 1995 over concerns of country having excess refining capacity. The delay has led to project cost rising from Rs 5,277 crore to Rs 6,354 crore, he said. The Bina refinery project was initially conceived to be a joint venture between BPCL and Oman Oil Company. BPCL and Oman Oil Company were supposed to hold 26 per cent equity in the project. However, Oman Oil Company later decided to limit its stake to Rs 75.5 crore it had contributed as equity (4 per cent at that time and about 2 per cent as per revised equity structure). The project facilities comprise a single point mooring, a crude oil terminal with connecting subsea and onshore pipeline at Vadinar in the Gulf of Kutch, including a 935 km cross-country crude oil pipeline from Vadinar to Bina, and a six million tonnes refinery at Bina in Madhya Pradesh for production of fuels and lube base stock. The updated report of Purvin and Gertz (P&G) has reconfirmed that Bina refinery products will be consumed within the economical radius, Behuria said. "The Bina refinery would bridge the demand-supply gap of the petroleum products in central and north India," he added.

http://omaninfoworld.freeservers.com/industry.htm

In addition to domestic refining projects, Oman also is considering various refining projects overseas, particularly in India. One project would involve construction of a 120,000 b/d refinery at Bina, in the central Indian state of Madhya Pradesh, to be operated by Bharat Oman Refineries. Work on this project is tentatively scheduled to begin in September 1996 and to be completed by 1999. Another major (120,000 -145,000 b/d) refinery project is being discussed for Deogad, on the Indian coast south of Bombay in . Oman hopes to supply roughly 60,000 b/d of crude oil to each refinery.

Bina refinery bags Gujarat's environmental clearance

Amitav Ranjan

New Delhi, Feb 10: The joint venture Bharat Oman Refinery project, which had been hanging fire for about four years, has received crucial environmental clearance from Gujarat, a petroleum ministry official said on Thursday.

"Last Friday, the Gujarat government gave environmental clearance for a 17km long crude oil pipeline from the single-point mooring (in the Gulf of Kutch) to the crude terminal at Vadinar," the official, who asked not to be named, said. The refinery project was approved by the Union cabinet in December 1995, but construction work was delayed because Gujarat refused to approve the crude pipeline on the grounds that it would damage the marine life, mangroves and coral habitat at Vadinar. Approval for the offshore crude import facility was crucial for the inland refinery planned at Bina in Madhya Pradesh, the official said."It (approval) was much needed and long overdue as Oman Oil had been indicating that it would walk out of the joint venture," he said. The six-million-tonne refinery is being set up by Oman Oil Company and the state-run Bharat Petroleum Corporation (BPCL). Oman Oil had repeatedly expressed concern over the delay in the project, saying that it would push up costs and make it economically unviable. A BPCL official said that the cost was now estimated at nearly Rs 76 billion, up from Rs 52.77 billion at the time of approval. The partners plan to hold 26 per cent equity each. Oman Oil has so far invested $30 million in the project. "The state government has favourably recommended to the Centre for Coastal

Regulation Zone clearance," said the ministry official. He added that the approval was expected to be issued by the end of February. Copyright 2000 Indian Express Newspapers (Bombay) Ltd.

As Gujarat dithers on 'green' signal, Bina refinery project cost rises by Rs 20 bn!

Prashant Jain in Bhopal The project cost of the proposed oil refinery at Bina, a joint venture of India and Oman, has shot up by Rs 20 billion with the Gujarat government dragging its feet on giving environmental clearance for laying a 16 km crude oil pipeline. The project to be set up at Agasod near Bina in Sagar district of Madhya Pradesh, has been waiting for the green signal for laying a 7 km-long pipeline in sea and a 9 km-long pipeline in soil respectively. The foundation stone was laid in 1995 by the then prime minister P V Narasimha Rao about four years ago. Official sources said that the delay has led to cost overruns by about Rs 20 billion to the present estimates of Rs 74 billion from its original cost of Rs 54 billion. An annual price escalation of Rs 5 billion may force the authorities concerned to wind up the project, the sources claimed. They said the entire project has run into rough weather as the project implementation could start only after receiving necessary clearances. The sources claimed that the present delay was irrational as another company has already laid a pipeline in the same area. A 940 km cross-country crude oil pipeline, with intermediate booster pumping stations, is to be constructed from Agasod to Vadinar, located in coastal area in Jamnagar district of Gujarat. Of this, 430 km pipeline is proposed in Madhya Pradesh while the remaining 510 km is to be in Gujarat. As per the project proposal, crude oil from Oman will be brought by ship to the sea near Vadinar in Jamnagar district of Gujarat from where it will be carried to Agasod through the pipeline. Out of this, the crude oil will pass through a seven km long pipeline to be laid in the sea. ''The Gujarat government has been dilly-dallying on the project on the pretext of wildlife conservation,'' the sources said. Under no circumstances, this 16 km-long pipeline could be

diverted through some other place as experts have said that such a move would not be technically feasible, they added. During his visit to Oman in September last year, Prime Minister Atal Bihari Vajpayee had assured that all the approvals related to the project would be cleared within 45 days as no technical hindrance was existing for its approval. Oman has exhibited a positive attitude so far. But it might retract from the project if the delay continued, the sources said. A joint venture company -- Bharat Oman Refineries Limited was formed for the project. It comprises two 26 per cent stakes of Bharat Petroleum Corporation Limited and Oman Oil Company Limited. The unnecessary delay would send wrong message to foreign capital investors, the sources said. The project was to be completed by 2002. But it will now take four more years for its completion due to the delay. The project will not only benefit the backward Bundelkhand area of MP but its petroleum-based products will save a lot of foreign exchange for the country, the sources said. On its completion, the project is expected to produce six million metric tonnes per annum, petroleum-based products including liquified petroleum gas, naphtha, motor spirit, aviation turbine fuel, superior kerosene oil, high speed diesel, fuel oil, bitumen and sulphur. Bharat Oman Refineries Limited has also signed a memoranda of understanding with the companies of the United States, Holland and France to work on the project. The project has incurred an expenditure of about Rs 1.5 billion for wire-fencing and for laying a 7.5 km-long road from the highway to the project site, the sources added. About 3,000 acres of land have been acquired and compensation distributed to the affected people.

Bharat Petroleum to go solo in Bins refinery

Dec 09, 2000 01:00 AM Bharat Petroleum Corporation Ltd (BPCL) has been given the go ahead for going solo in the Bina refinery so that work on the delayed project can get underway. Petroleum Minister Ram Naik stated that BPCL will be allowed to proceed with the project on the same lines that Indian Oil and Hindustan Petroleum have been permitted to start work on the Paradip and Bhatinda refineries respectively. These three projects have been delayed as the prospective foreign partners had been wavering on

their decisions to take the final plunge. In the case of the Paradip refinery and the Bhatinda refinery the foreign partners had finally withdrawn from the project. The Bina refinery has been held up because the Gujarat government was not giving it environmental clearance for the crude oil terminal and pipeline from the western coast. The Oman Oil Company (OOC) ran out of patience and expressed its opinion to withdraw from the project. Mr Naik said that he had taken up the issue with the Gujarat government and all necessary clearances had now been obtained. He said that although "we are still hopeful that OOC will participate in the joint venture, we cannot delay the project any longer." The foundation stone of the refinery was laid during Mr PV Narasimha Rao's tenure as Prime Minister, he added. The minister said that he had also informed OOC that the Bina refinery joint venture had been agreed to on a Government-to-Government basis and therefore the company should honour the commitment. Meanwhile the BPCL management, which is keen on undertaking the project on its own, has been asked by the Petroleum Ministry to have the detailed proposal cleared by its board of directors. The Petroleum Ministry will then put up the proposal for fresh approval by the Cabinet committee on economic affairs (CCEA). The Bina refinery project in Madhya Pradesh was approved by the CCEA in December 1995 at an estimated cost of Rs 5,277 crore. The project cost was updated in January this year with the help of Engineers India. The revised project cost has now shot up to Rs 6,562 crore. The project involves the setting up of a 6 mm ton grassroots refinery which will be supplied crude through a 935 km pipeline from the Gujarat coast. Both BPCL and OOC were expected to contribute 26 % of the equity and balance 48 % will be sourced from the public while the debt portion will raised from banks and financial institutions. According to oil industry analysts, the government's earlier policy of forcing the cash-rich public sector oil companies to scout for foreign partners has clearly backfired. The policy only appears to have introduced uncertainty and delay in these projects. Source: The Hindustan Times Bina Refinery project passes another test
By A Business Correspondent With the Supreme Court clearing the construction of a crucial pipeline through the eco-sensitive Marine National Park in Gujarat, the Bina Refinery project has crossed almost all the major hurdles except that of funding. A three-judge bench said the court's earlier order banning any activity in national parks and sanctuaries would not be applicable in case of Bharat Oman Refineries Ltd's (Bina Refinery) 7-km submarine crude pipeline from the Gulf of Kutch to Vadinar. Though the company received environmental clearance for its proposed 943-km crude pipeline in June 2001, there were objections against the 7-km stretch passing through the park. With the latest apex court ruling the Union petroleum and natural gas ministry will soon seek Cabinet approval of the revised cost estimates.

It may be noted that due to inordinate delays the cost of the project had risen from the original estimate of Rs 3,900 crore to Rs 7,513 crore. If the government decides to increase the installed capacity from 6 million tonnes to 9 million tonnes, the cost of the project could escalate further to Rs 9,500 crore.

(1/8/02)

Annual Report 2001-2002

PROJECTS Central India Refinery Project

With the acquisition of a majority stake in KRL and NRL, the product availability from BPCs own sources is almost in line with the demand. In spite of this, BPC does not have its own source of supply in the ever-growing Northern Region. Though in the short term BPC can supply the North through product exchanges with other producers, in the long run, the proposed Refinery at Bina, Madhya Pradesh, is important for product supply security. A 6 MMTPA capacity grassroots Refinery with facilities for production of Lube Oil Base Stock is being set up at Bina in Madhya Pradesh by Bharat Oman Refineries Limited (BORL), a Joint Venture project of BPC with Oman Oil Company Limited (OOCL). The revised cost of the project, as approved by the Government, is Rs. 63,540 million including a foreign exchange component of Rs. 20,250 million. So far, BPC and OOCL each have paid Rs. 755 million towards their equity contribution in the project. The environmental clearance for crude import facilities/cross country pipeline under the Wild Life Protection Act from Chief Conservator of Forests, Wild Life, Gujarat and clearance from the Ministry of Environment and Forests (MOE&F) were received in February / March 2000. However, in October 2000, the Chief Wild Life Warden (CWW), Govt. of Gujarat imposed a restraint on BORL for carrying out any activity in the National Marine Park area for laying the crude pipeline. The Supreme Court has now stayed operation of the said letter of restraint. A number of Special Leave Petitions have been filed in the Supreme Court, which are being simultaneously heard. In view of the inordinate delay in receiving the final Environmental Clearance, OOCL has decided not to invest fur ther in the project. As a consequence, BPC has proposed to increase its contribution to 50% from the present limit of 26%, for which Governments approval is awaited.

August 31, 2001 '30' BINA REFINERY PROJECT

The Ministry of Environment and Forests has received two proposals for seeking forestry
clearance under the provisions of Forest (Conservation) Act, 1989, i.e., one each for the States of Gujarat and Madhya Pradesh, for laying crude oil pipeline in favour of Bharat Oman Refinery Ltd. for Bina Refinery Project. The proposal for the Madhya Pradesh portion, involving 15.177 hectares of forest land, has been approved in-principle on 22.8.2001. Similarly, the proposal for the Gujarat portion, requiring 30.0318 hectares of forest land, has been approved in-principle on 7.12.1999 subject to the condition of approval by the State Government under Wildlife (Protection) Act, 1972. A portion of the pipeline passes through the Marine National Park. In view of the Supreme Courts order banning felling/removal of trees from National park/sanctuary, a meeting was held with the State Government officials and the project authorities recently. The project authorities have been advised to lay pipeline in the portion forming part of national park/sanctuary by horizontal drilling at such a depth so that there is no subsidence or vibration on the surface and there is no adverse impact of laying the pipeline on the forest and wildlife inside the sanctuary/National Park. Both the above-mentioned in-principle approvals are subject to fulfilment of certain conditions. After receipt of compliance reports on fulfilment of these conditions from the State Governments, formal clearance shall be granted by the Central Government. This information was given by the Union Minister of Environment and Forests, Shri T.R. Baalu in reply to a question from the Hon'ble Members, Shri Bhagatram Manhar and Shri Raju Parmar in the Rajya Sabha today.