Financial Daily from THE HINDU group of publications
Saturday, Mar 23, 2002
Financial Daily from THE HINDU group of publications Saturday, Mar 23, 2002 |
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Industry & Economy
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Petroleum IOC firm on converting Kandla-Bhatinda pipeline -- RPL, Essar told to make own arrangements Our Bureau
MUMBAI, March 22 RELIANCE Petroleum and Essar Oil would have to make their own arrangements to move products to the North, with Indian Oil Corporation Ltd (IOC) adamant on converting the Kandla-Bhatinda product pipeline into a crude oil carrier. The decision would also risk rendering Petronet India Ltd's Rs 400-crore Vadinar-Kandla pipeline useless. Mr M.A. Pathan, Chairman, IOC, told newspersons that two years, during which the conversion would happen, was enough for other users, including Reliance Petroleum Ltd and the upcoming Essar Oil to make alternative arrangements. ``All (companies) concerned have been advised to take care of their interests during this period,'' Mr Pathan said. The 1,443-km product pipeline currently carries products from RPL's 27-m.t. Jamnagar refinery. Converting the pipeline into a crude carrier would render Petronet India Ltd's 117-km Vadinar-Kandla pipeline useless. The tube is currently used by RPL, and would have also transported Essar Oil products once the refinery went on stream, to move products up to Kandla. From here, the Kandla-Bhatinda pipeline transports the products up North. Mr Pathan said the conversion would save IOC Rs 1,000 crore and make Panipat refinery expansion viable. Mr Pathan said: ``We plan to later increase the capacity of Kandla-Bhatinda line to 8 m.t .(7.5 m.t). Converting it to a crude mover will enable us to scale up capacity of the 13.8-m.t. Koyali refinery to 18 m.t. and then to 25 m.t. Even the Mathura refinery can be expanded to 11 m.t. from the present 8 m.t. once the Government embargo on expansion is lifted.'' The company will not participate in the construction of the Central India pipeline. IOC plans to focus on marketing in the product-starved North and North-West regions of the country. It has planned a ``reverse loop'' pipeline linking Panipat refinery and Bhatinda through Revari. It plans a pipeline network linking Koyali, Sidhpur, Selvas and Sangner to service the region. IOC has ruled out any possibility of a ``take-or-pay'' agreement for the Chennai-Tiruchi pipeline. Mr Pathan said IOC would develop its own pipeline if Petronet India insisted on a ``take-or-pay'' contract. This, say analysts, will throw the ``common carrier principle'' on which Petronet India Ltd's projects are based, out of the window. ``There is an urgent need for a comprehensive, national policy on pipelines. Either the Government should admit that the infrastructure is a `natural monopoly' and let each company set up independent pipelines or ensure compliance with the `common carrier' principle,'' said Mr Harindran Nair, Executive Director, KPMG. KPMG is consultant to the Central India Pipeline Ltd.
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