MRPL 3rd phase to be completed by October 2011

Mangalore: The phase III expansion project of Mangalore Refinery and Petrochemicals (MRPL) will now cost Rs 4,469 crore more and will be delayed by 15 months.

Though the company attributes this delay to the market conditions, it also feels that the delay has helped it to re-engineer the process design.

The company announced the new date for completion of the project at October 2011 as against the previous plan of June 2010 and a revised project cost of Rs 12,412 crore against the earlier estimate of Rs 7,943 crore.

Quoting Mr U.K. Basu, Managing Director of MRPL, a company statement said: “While Phase III was to have achieved mechanical completion by June 2010 and the original estimate was Rs 7,943 crore, we have been beleaguered by an overheated market hampering appointment of process licensors, delay in land acquisition, and the steep increase in steel and cement prices in the last 12 to 18 months.”

However, the company feels that the delay has helped it to re-engineer the process design.

Mr Basu said that despite 50 per cent cost overrun and a 15-month time overrun, the company has benefited from the delay. As the country was exposed to unprecedented volatility in crude prices and the consequent market dynamics, MRPL re-engineered the process design to make the new unit capable of handling high tan and acidic crudes more than envisaged before, and added some more secondary processing units to upgrade residues and the entire HSD (diesel) quality.

“We have ensured that the best of technology is being brought in, and we are fully equipped to handle the crude price movements and take advantage of the differential pricing in high tan, acidic crudes that most refineries in India cannot process,” he said.

“Heavy machineries have to be moved in and positioned. Around 10,000 to 12,000 people, comprising skilled and unskilled, are required for the construction work of this project,” he added.

Under the phase-III, MRPL is augmenting its refining capacity from 9.6 million tonnes per annum (mtpa) to 15 mtpa. Preparatory work has been on for sometime now and the mandatory approvals have since been secured, process licensors appointed, and work awarded for execution of petrol fluidised catalytic cracking unit (PFCCU) and sulphur recovery unit (SRU). Engineers India Ltd is the Project Management Consultant.

Funding

The project will be funded through a 2:1 debt equity ratio. The equity portion will be financed using the MRPL internal accruals and the debt would be raised from the market.

The company estimates that nearly 90 per cent of the plant and machinery cost will be from local funds and the balance from overseas sources.

MRPL’s Rs 10 shares were up nearly 8 per cent on the NSE on Thursday and closed at Rs 37.65.