State-owned Indian Oil Corporation’s (IOC) 15 million tonnes a year Paradip Refinery in Orissa is likely to be completed in first quarter of 2013, a good one year behind the previous stated schedule.

Refineries commissioning after March 31, 2012 will not be eligible for exemption from payment of income tax on revenues earned for first seven years of operations. The seven year income tax holiday for the refining sector ends next year.

“IOC has reported that the (Paradip) project is expected to be completed by first quarter of 2013,” Minister of State for Petroleum and Natural Gas Mr R P N Singh said in a written reply to a question in Lok Sabha here.

The company had been targeting to commission the Rs 29,777-crore Paradip Refinery by March 2012 and sell fuel produced at the unit in domestic market rather than export as it was earlier thought, due to rise in fuel demand at home.

The refinery was originally planned to export at least 2.05 million tonnes of petrol and 124,000 tonnes of naphtha out of its yearly output of 15 million tonnes. But double digit growth in petrol and diesel consumption had meant that there would be very little left for exports.

Paradip refinery will produce 5.97 million tonnes of diesel, 3.4 million tonnes of petrol, 1.45 million tonnes of kerosene/ATF, 536,000 tonnes of LPG, 124,000 tonnes of naphtha and 335,000 tonnes of sulphur, all of which will be for sale in the domestic market.

Some 200,000 tonnes of propylene to be produced by the unit may be exported, the company had earlier said.

IOC had previously stated that the refinery will start producing fuel by March 2012 when it will commission the primary units like Crude Distillation Unit. Secondary units will be commissioned by July, 2012, and operations stabilised by November 2012.

Besides the Rs 29,777 crore cost of refinery, the Paradip project also includes a Rs 1,793 crore pipeline to Raipur and Ranchi. The 1,100 km pipeline will carry fuel produced in the unit to consumers in Orissa, Jharkhand, Chattisgarh and Madhya Pradesh. Besides, a marketing terminal at the cost of Rs 414 crore is also being built.

IOC had in 2009 signed a loan agreement with a consortium of lenders led by State Bank of India for term loan of Rs 14,900 crore for the project.

It had some time back split the refinery-cum-petrochemical complex into two, deciding to complete the refinery first and follow with the chemical unit.

The Paradip Refinery is being configured to process the toughest, heaviest and the dirtiest crudes which are cheaper than the cleaner and easier varieties.

The refinery will have a Nelson Complexity Index of 13, the highest in the world.

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