IF critics scoffed at ONGC Videsh Limited's participation in Sakhalin-I, they were equally vehement in attacking the Oil and Natural Gas Corporation for acquiring a majority stake in an ailing Mangalore Refinery and Petrochemicals Limited (MRPL) in 2003. But the decision on the latter, taken by Subir Raha, former Chairman and Managing Director, has proved right. Raha wanted the ONGC to keep up with the international trend of oil majors becoming vertically integrated companies with the capability to refine oil and market it.
The MRPL was set up in 1996 as a joint venture refinery of Hindustan Petroleum Corporation Limited and the A.V. Birla group of companies. It fell on bad times after the administered price mechanism was dismantled in 1997. In 2002-03, it incurred a loss of Rs.412 crores. The ONGC acquired the entire share holding of the A.V. Birla group, pumped in more money and turned the company around in 368 days. The MRPL thus became a subsidiary of the ONGC and is recognised today as the leading refinery in India in terms of capacity utilisation, energy efficiency and safety record. In 2005-06, it earned a profit of Rs.372 crores.
According to R. Rajamani, Managing Director, MRPL, although the company's installed capacity was only 9.69 million tonnes a year, it was "operating today at 12 million tonnes". This meant a capacity utilisation of 125 per cent. "This [financial] year we are targeting 12.5 million tonnes," he said. The capacity is being stepped up to 15 million tonnes a year. This included refining crude into petrol, kerosene, high-speed diesel and aviation turbine fuel.
On December 2, 2006, the MRPL was the focus of attention because it received OVL's share of crude ferried from Sakhalin-I and started refining the sweet and bonny light crude the same day.
Two other important events marked the MRPL's 10-year history that day: the inauguration of its isomerisation and paraxylene units. The isomerisation unit, built at a cost of Rs.234 crores, would produce Euro-IV grade petrol. Rajamani said it would be the first refinery in the country to produce petrol of that grade. It was the first in India to produce lead-free petrol.
The unit that produces paraxylene, which is used in making films, polyester and fibres, was set up at a cost of Rs.52 crores.
According to R.S. Sharma, Chairman and Managing Director, ONGC, the MRPL is being expanded at a cost of Rs.8,000 crores, and the work will be completed in 2010.
The ONGC is scripting another story in Mangalore - setting up a Special Economic Zone (SEZ) near the city with petrochemical facilities to use the products from the MRPL. A special-purpose vehicle (SPV), Mangalore SEZ Limited, was incorporated in February 2006 with 26 per cent equity participation by the ONGC, 23 per cent by the Karnataka Industrial Area Development Board and 51 per cent by Infrastructure Leasing & Financial Services (IL & FS).
Sharma said the ONGC's investments in the Mangalore SEZ would cover several projects, including an aromatics complex that would cost Rs.5,000 crores, an olefin complex, an LNG terminal and an LNG-based power plant.
The MRPL was considering setting up the phase-III expansion of its refinery at the Mangalore SEZ. Besides, a 100 per cent export-oriented green-field refinery would come up at this SEZ, Sharma said.
T.S. SubramanianCOMMents
COMMents
SHARE