IOC puts Paradip petchem projects on hold

NEW DELHI (ICIS news)--Indian Oil Corporation (IOC) will put at least part of phase I of its Paradip petrochemicals project on hold due to a sharp increase in the projected costs, a company official said on Wednesday.

IOC still plans to implement the refinery portion of the project on time, but the timeline for construction of the petrochemical units was no longer clear.

The cost of Phase I of the project has jumped to Indian Rupees(Rs)460bn ($11bn)from Rs256.46bn, a company official said on Wednesday.

Phase I includes a 15m tonnes/year refinery and four petrochemical units for production of paraxylene (PX) with benzene as a byproduct; styrene, polypropylene (PP) and alkylate.

Phase I is scheduled for commissioning by March 2012. It would be located at Abhayachandrapur in Orissa State. IOC has already selected process licensors for all units of Phase I.

The IOC official did not specify which petrochemical units were being put on hold and for how long.

IOC would first implement the refinery at a cost Rs300bn, he added.

Phase II of the complex includes a naphtha cracker and downstream polymer units. The IOC board has yet to approve Phase II.

The official said IOC he company had also decided to put on hold all new investment proposals in all business segments due to a cash crunch due to rising crude prices and sale of four petroleum products at highly subsidised prices.

The company would, however, continue to implement ongoing projects, the official said.

IOC was incurring cash losses of Rs3bn/day.

($1 = Rs42.85)