Assisted by a steep fall in commodity prices, Essar Oil expects to bring down the cost of its 34 mln tpa refinery project from the earlier $6 bln to $5.5 bln, converting savings of Rs 2,500 crore. Prices of steel that have tanked by over 60% from June 2008, will be the major contributor to savings. Steel is a major input in a refinery project, and has sunk to Rs 35,000/ton.
The company has suspended its plan for an integrated plant alongside its refinery project, mainly due to deteriorating demand amid the global economic meltdown. The plans will be revived only on completion of the refinery expansion by end of the year/early 2010.