National Aluminium Company (Nalco), after a 32-month long delay, is finally ready to commission its expanded refinery capacity this month.

The 5.25 lakh tonnes per annum (ltpa) and Rs 4,402-crore 2nd phase expansion project, which will raise the refinery capacity to 21 ltpa, however, could see 10 per cent cost escalation, Mr B.L. Bagra, CMD of the state-owned company, told Business Line .

Precise cost calculations are yet to be finalised.

“As of now, we do not anticipate significant cost escalation. This is because all the packages for supply of equipment and for works were awarded on schedule. Most equipment were supplied on time and were paid without escalation,” Mr Bagra said.

Some erection, installation and civil works at Damanjodi refinery in Orissa's Koraput district got delayed, primarily because of subversive activities by the ultra Left. Fourteen people, including four extremists, were killed in a gun battle at Nalco's bauxite mine at Panchpatmali, 40 km off Damanjodi, in April 2009, which caused Nalco's contractors including their labourers to flee the project area.

“We anticipate minor escalation on account of the additional cost paid for the works, which were left incomplete by the original contractors. Though the additional cost would be recoverable from the original contractors, who defaulted, certain extra expenditure cannot be ruled out. This, however, is expected to be within 10 per cent of the approved cost estimate,” he explained.

The commissioning work began on June 30. “The synchronisation and stabilisation process took about four to five weeks to complete. If everything goes well, the saleable product should be out this week,” Mr Bagra added.

He said that the expansion work of the mine at Panchpatmali was complete. It is ready to produce enhanced volume of bauxite and transport it to the refinery.

“From this week, we also intend to start additional mine production,” he added.

There are, however, some works still at hand that seek to optimise transport cost of ore from the mine face to crushing and transporting sites.

Later this fiscal, the refinery capacity would further be upgraded to 22.75 ltpa when the additional equipment under the 2nd phase is put to work.

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