Will ONGC abide by the findings of a pre-feasibility study which questions the commercial viability of its refinery project at Kakinada in Andhra Pradesh?
The project comprises a 15m tonnes/year refinery and a 400,000 tonnes/year polypropylene (PP) facility.
The study shows that the project faces poor profitability unless it receives heavy fiscal benefits. This is not the first time that ONGC has faced this hurdle. An earlier study had raised similar questions on a refinery in Barmer, Rajasthan.
India has too many refinery projects on hand and most of these are targeting the export market.
Deutsche Bank estimates that India is likely to boost its refining capacity by 45% (63.5m tonnes/year) from 146m tonnes/year over the next five years.
Besides the Kakinada project, Andhra Pradesh has one more refinery lined up – this one by HPCL.
With the Kakinanda refinery in doubt, the petroleum, chemicals and petrochemicals investment region (PCPIR) planned at the site may have to be scrapped. At this rate, will India ever have a PCPIR?