The government is likely to award a project to set up a second crude refining unit to treble the capacity of the Eastern Refinery Ltd to French state-owned Technip which constructed the first unit in 1968 with 1.5 million tonnes capacity.
The energy division on Monday issued a letter instructing the ERL to ask Technip to submit a complete proposal with the sources of funding for implementation of the project as the company had earlier expressed its interest in this regard, officials said.
Being failed to award the project through a tender process in last 12 years, the government has now decided to implement it under Speedy Supply of Power and Energy (Special Provision) Act, 2010, they said.
State minister for power, energy and mineral resources Nasrul Hamid told New Age that the French company had expressed its interest to treble the facilities of ERL and offered to arrange US$ 600 million French credit for the project.
TECHNIP also offered to manage rest of the funding for the project from different commercial sources, if the government provides sovereign guarantee, he said, adding that it was a good offer.
He also said, ‘The second unit of ERL with 3 million tonnes refining capacity would relieve us of being dependent on importing crude from the Middle East only as it would be able to refine crude from other sources like from Canada which is cheaper.’
Once the project is completed, the ERL will be able to refine 4.5 million tonnes of crude into diesel, petrol, octane, furnace oil, and other petroleum by-products a year which would enable the government to save over US$ 200 million a year by avoiding import of refined oils.
At present, the ERL’s yearly refining capacity is a maximum of 1.5 million tonnes of crude and the government imports 4 million tonnes of diesel, furnace oil, and other petroleum oil to meet the domestic demand for transportation, power generation, industries, irrigation, and so on.
A consortium of three French companies led by TECHNIP installed the ERL refinery unit which started commercial operation in 1968 with 30 years economic life.
The refinery, however, was still in operation with 97 per cent plant factor even after its economic life had expired over 15 years ago, energy division officials said.
Source: New Age
