Indian Oil Corporation [Get Quote], the nation's biggest refiner, has stated that the global meltdown will not impact the setting up of its Paradeep refinery since the company does not have any funding problem for the project.
However, the state-run oil marketing company a couple of months back had re-phased the project comprising the refinery and a petro-chemical complex in view of escalating cost.
Both the refinery and the petro-chemical complex at Paradeep were earlier estimated to cost Rs 26,000 crore (Rs 260 billion). But the cost has now gone up to about Rs 45,000 crore (Rs 450 billion).
In this back drop, the company had decided to set up the refinery first and follow it up with the petro-chemical complex in the second phase. For the refinery, IOC has no problem to fund the project in the current recessionary market conditions.
"We do not have any funding problem for the refinery and the global meltdown will not impact the $10 billion Paradeep project", Sarthak Behuria, chairman, Indian Oil Corporation said. The project will be implemented in two phases with the 15 million tonne refinery coming up first. "The project has taken off and we have already invested about Rs 3000 crore to Rs 3500 crore", he added.
Participating in an interactive session organised by the Xavier Institute of Management, Bhubaneswar on its foundation day, Behuria said, the final approval for the project is yet to come. He said, fixing the dateline for completion of such a huge project is not possible and this will depend on general law and order situation in the project area, the co-operation of the banks and roping in a joint venture partner.
The company has acquired the required land for the project and the ground leveling is being done before the start of construction work. However, IOC is yet to achieve the financial closure for the project.
Asked whether the dual pricing system for petroleum products can be an option for the government, Behuria said, it will not work.
"The introduction of dual pricing system will not work as it will lead to diversion of products. The introduction of a common pricing regime will be the only way out". Stating that there is a need for moving to the regime of market driven price system for petroleum products, the IOC chairman said, the subsidy on the petroleum products given by the government to the consumers should be in cash.
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