Tripathi clears $3.4bn Numaligarh expansion

Vol 20, PW 23 (10 Aug 17) Midstream & Downstream

Oil secretary KD Tripathi has given the green light to Numaligarh Refinery's long-awaited expansion from 3m to 9m t/y.

A refinery source confirms Tripathi approved the central government's Rs7426cr ($1.16bn) capital subsidy or investment in the Rs21,842cr ($3.41bn) project on July 28. "The most important process at the oil ministry is complete," he says.

"Now the file will go to the expenditure secretary in the finance ministry." He adds the expansion must then be cleared by the Public Investment Board (PIB) before it moves to the cabinet for final approval. "Construction work might even begin as soon as the end of this year (2017)," adds our source.

"Completing the expansion is likely to take four years." Bharat Petroleum subsidiary Numaligarh asked the central government for 34% of the estimated cost as capital subsidy to improve its Internal Rate of Return (IRR) which it predicted would be below the minimum 12% without a government subsidy. Another positive development is a decision by partner Oil India to provide Rs476cr ($74m) for the project; the Assam government will invest Rs227cr ($35m).

"We received a letter from (Oil India director finance) Rupshikha Bora on June 15 committing the investment," we hear. "And the Assam government confirmed its investment on June 16." Included in the expansion budget is the cost of laying a new 28-inch diameter, 1m t/y crude oil pipeline running 1400-km from Paradip port in Orissa to Numaligarh.