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For two decades now, the capacity of the Numaligarh Refinery in Assam has remained unchanged at three million tonnes. This is because crude is not easily available from local fields in the north-east.
Capacity enhancement
The parent company, Bharat Petroleum Corporation, now wants to enhance capacity of the refinery to nine mt to meet the growing demand for petro-products in neighbouring Bihar and Uttar Pradesh. However, this is not going to be the easiest of tasks from the viewpoint of accessing crude comfortably.
“One option that could be examined is getting crude by pipeline from the east coast,” says an oil industry official. Logistics pose the biggest challenge here as the north-east terrain is not the easiest to traverse. This, in turn, could translate into a high cost structure and, hence, a deterrent for BPCL.
Going by present estimates, the expansion alone will end up being upwards of Rs 12,000 crore. There is a strong possibility of fiscal incentives coming in from the Centre, since this is a north-eastproject which will logically qualify. “Yet, it will add up to nothing if crude is not made easily available,” the official adds.
BPCL picked up a 32 per cent stake in Numaligarh Refinery from IBP, the standalone oil marketing company, in the mid-1990s.
The latter was left with 19 per cent and eventually ceded this portion when it became part of IndianOil, during a major restructuring exercise of the oil sector a little over a decade ago.
Subsequently, Oil India, the exploration company, entered the picture and now accounts for 26 per cent, while the Assam Government holds 12 per cent. BPCL is the largest shareholder with 62 per cent and it remains to be seen if it will offload a part of this stake in the near future when Numaligarh Refinery goes in for a public issue.
BPCL had, not-so-long ago, explored the option of retailing petrol and diesel from Numaligarh to neighbouring Bangladesh using the waterway route.
Likewise, Myanmar was also considered an attractive market as it could be easily accessed by road. Neither idea was implemented as they required political intervention which, in turn, could have paved the way for bi-lateral trade.
These two countries, along with Bhutan and Nepal, will be ideal export destinations for Numaligarh once the expansion is found feasible. Within India, Bihar and Uttar Pradesh are the best bets going forward, given the growing demand for petro-products in these two States.
It is precisely for this reason that BPCL is keen on kickstarting a new refinery in Allahabad post-2015.
> murali.gopalan@thehindu.co.in
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