IOC may decide on Paradip project by month-end

13 June 2008 06:28  [Source: ICIS news]

MUMBAI (ICIS news)--Indian Oil Corp (IOC) is expected to decide by the end of this month on a timeline for its refinery, paraxylene (PX), polypropylene (PP) and styrene projects at Paradip, Orissa, said a company source late Thursday.

"One idea is to commission the refinery by March 2012 and complete the PX, PP and styrene projects in 2013. This will be debated by the board later this month," the source added.

"We are also looking at having just a basic refinery by March 2012 before the expiry of a tax break offered by the government. The more complicated units such as coker and fluid catalytic cracker (FCC) would be completed after a year," he said.

The Indian government has offered a seven-year income tax holiday for new refineries that begin operations on or before 31 March 2012.

The refinery and PX, PP and styrene projects form phase 1 of the state-owned company’s proposed Paradip complex. The second phase includes a cracker and derivative units.

ICIS news had reported in late May that the timeline of the petrochemical projects at Paradip was unclear because of a sharp increase in project costs and that part of the first phase would be put on hold.

IOC is currently facing a cash crunch  and its refining business is losing money as prices of refined products, which are state controlled, have not increased in line with crude oil prices.

"Our day-to-day borrowing is so huge that drawing money for projects is becoming difficult. Our finance team is also not sure if debt can be obtained at a reasonable rate," said the source.

But he stressed that the top management of the company was convinced that projects that offer value addition should not be missed out.

On the second phase of the Paradip complex, the source said the company was not yet ready with the configuration and cost. This phase is likely to come up two-three years after the refinery, he added.

For more on PX, PP and styrene visit ICIS chemical intelligence 
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By: Malini Hariharan
+65 6780 4359

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