New Delhi: Oil and Natural Gas Corp (ONGC) is in talks with London-based Hinduja Group for a partnership in its proposed six billion dollar refinery at Kakinada in Andhra Pradesh, a project whose fate would be decided next month after economic feasibility studies are completed.

"A pre-feasibility study by (state-run) Engineers India Ltd had found 7.5 million tons capacity economically unviable and suggested a minimum size of 15 million tons. "Now we are doing sensitivity analysis (of demand-supply mix and fiscal incentives) and results will be out by November end," ONGC chairman and managing director R S Sharma told reporters on sidelines of an industry conference here.

The sensitivity analysis, besides studying the demand- supply pattern, would also determine at what level of tax and fiscal incentives the refinery project would become viable. ONGC, Sharma said, was talking to Hinduja Group for a possible strategic partnership. "We have not had any formal talks (with Hindujas) but yes informal discussions have taken place."

"The project is expected to cost Rs 24,000 crore to Rs 25,000 crore and will take 3-4 years to build (from the date of starting development)," he said. "We will decide on the project once sensitivity studies are complete." Even on the enlarged capacity, the company had sought fiscal incentives like exemption from local levies and free of cost land.

Sharma said the project is proposed to be build by a special purpose vehicle, Kakinada Refinery and Petrochemicals Ltd in which ONGC will have a 46 per cent stake. Another three per cent stake will be held by ONGC's subsidiary Mangalore Refinery and Petrochemicals Ltd. The remaining stake would be held by a strategic partner and financial institutions.

 

Source : PTI