Pre-feasibility report negates viability of ONGC's Kakinada refinery

14-Aug-07
Oil and Natural Gas Corporation's (ONGC) proposed greenfield refinery at Kakinada, Andhra Pradesh, has been found commercially unviable in a pre-feasibility report prepared by Consultants Engineers India Ltd (EIL). A detailed feasibility report on the 15-mln ton refinery, for which the company had marked an investment of about Rs 22,000 crore, is expected to be finalised later this month. As per the report : * Refinery profitability will not be possible unless heavy fiscal benefits are granted. * Hindustan Petroleum's upcoming 15 mln tpa refinery in Vishakapatnam, in the same region, will also lead to overcrowding of suppliers in the market. However ONGC's proposed Kakinada refinery is proposed to be an export-oriented one. With the refinery's viability being called into question the petroleum, chemicals and petrochemicals investment region (PCPIR) planned at Kakinada may not take shape, as every PCPIR has to be anchored around a refinery, which will supply the feedtsock for the chemicals and petrochemicals industries in the region. While the central government would provide infrastructure linkages like rail, road, port, airport and telecom connectivity in the PCPIRs, the state government concerned would provide power, water, roads, sewage and effluent treatment linkages, besides health infrastructure. The company had earlier found its other proposed greenfield refinery at Barmer in Rajasthan to be unprofitable, too.
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