Stalled refinery expansion plans under PMO radar

May 29, 2023 10:40

Representational image

Nudged by the prime minister's office, the petroleum and natural gas ministry is set to expedite discussions with stakeholders on half a dozen expansion and greenfield development plans of stalled oil refinery projects. These units have been facing roadblocks due to land hurdles, lack of environmental clearances or funds.

This move is set to boost domestic crude output and meet the rising demand. One of the projects under consideration is the contentious West Coast Refinery in Ratnagiri, Maharashtra.

The government will soon form a core team to look into the hurdles, revive talks and bring multiple stakeholders to the discussion table, officials said. This will include officials from the ministry and oil marketing companies (OMCs), among others.

"Even for those projects in the public sector, the executing agency is OMCs, state governments or private participants. The ministry often acts as a bridge, and that is what we will do," an official said.

The government is working to raise the total crude oil refining capacity in the country to 450 MMTPA (million metric tonnes per annum) from the current 250 MMTPA or about 5 million barrels per day (bpd).

Meanwhile, fuel demand is expected to double to 10 million bpd by 2050. India already has the fourth-largest crude refining capacity in the world.

However, the rapidly growing domestic demand has made the government prioritise capacity addition.

Fuel consumption reached a 24-year high in February 2023 to 4.82 million bpd. Consequently, the country's petroleum product consumption may touch a new high of 233.81 million tonnes in 2023-24, according to government estimates.

Complex and capital-intensive refinery projects generally have a long gestation period. But a slew of challenges has held up the industry's growth in India.

The largest such project is the planned West Coast Mega Refinery, which is set to come up in the Nanar area of Ratnagiri district.

First announced in 2015, the $44 billion project had targeted an unprecedented refinery capacity of 60 MMTPA.

But a lack of cooperation between the then Shiv Sena-controlled Maharashtra government and the BJP-led central government had held up the mega project. In 2018, Saudi Aramco and the UAE's ADNOC had signed a framework agreement to jointly develop the Ratnagiri refinery.

-- Subhayan Chakraborty/Business Standard

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