HPCL wants technology for Barmer refinery

Vol 16, PW 18 (04 Apr 13) Midstream & Downstream

Engineers India (EIL) wants a 5% stake in Hindustan Petroleum's proposed 9m t/y Barmer refinery project in Rajasthan.

But EIL could instead have to settle for being the EPC and management contractor (EPCM). "Our experience with EIL at the (9m t/y) Bhatinda refinery was excellent,” says a HPCL source.

“Most probably we will award the Barmer EPCM contract to EIL in July.” HPCL is however reluctant to give 5% in Barmer to EIL.

It seems HPCL wants to take 51% so it can have management control and the Rajasthan government wants 26%. That leaves only 23% available.

But ONGC, which originally proposed the Barmer refinery, wants 26% too. "We are negotiating with ONGC to convince it to take only 23%," explains HPCL.

"But we cannot give EIL 5% as that will leave only 18% for ONGC. Our best option is to convince EIL to be our consultant and to forget about the stake.

" HPCL adds if ONGC remains stubborn then another way out is to offer it 26% and slash Rajasthan's stake down to 23% instead. EIL sent in a DFR for the refinery in March.

HPCL expects to finalise equity participation by April 15 and by end-April it wants to apply to form a joint venture company under the Companies Act, 1956. Rajasthan has finished acquiring 3300 acres of land for the project and only needs to acquire an additional 200 acres near the Leelala area in Barmer.

"We expect all land acquisition to be completed by end-May," adds another HPCL source. "By end-June we expect clearance from the Cabinet Committee on Economic Affairs.