At an online meeting with the Vidarbha Economic Development Council (VED), LK Gupta, former Managing Director & CEO of Essar Oil Ltd and Vadinar Power Co. Ltd., came to a logical conclusion that a refinery, but necessarily with a petrochemical complex, was feasible in Vidarbha, which in ten years of its functioning would transform the region totally. Relevant questions regarding potential investors, amount of investment, the capacity of refinery etc. were clarified by him.
Today, it is generally being felt that with an increasing number of battery-operated vehicles, the use of petrol would be minimized, but Gupta felt that was not to happen anytime soon, and anyway, a Greenfield refinery in Vidarbha would take a minimum of 7-10 years to set up and be functional.
Do we need one at all was the moot question? Right now no refineries are coming up as it’s not easy to implement such a task as today refineries are not as simple as they were 20 years back. Today, they are very complex where the future is not in refinery alone, but in a refinery with a petrochemical complex for it to be market-friendly. Investing in a refinery alone would not make sense. So then, the investment would be much higher too.
Gupta felt that we do need a refinery. If petroleum revenues are lost we would have to incur a loss of 10 lakh crores, not an amount to be sneezed at. Looking at it practically, a shift from petroleum to electric vehicles would take a long time. In future, we think of 8-10% growth, for which the number of electric vehicles would not be enough.
Essar has put up a product terminal in Wardha as there’s a demand for products there, so Vidarbha can be a good place for a refinery. All products besides petrol, diesel, and gas coming from refineries have good demand in Vidarbha like PetCoke for Cement, PetroChemicals for IndoRama etc. As experts say the demand for coal may reduce with more green energy, Vidarbha coal may be converted into gas or crude oil which would further help refinery.
The crucial ingredients for it are:
1) Land – 90% has to be acquired by the investor while the Govt would give 10%. The desirable area requirement for such a huge project is around 10,000 acres (including the ownship) for which 1/3 is mandatory green/forest cover, hence refineries are huge assets. Another 2000 acres are needed for the downstream ancillaries. If land is at 1 crore per acre as in Ratnagiri, it’s exorbitant.
2) Water to run a power plant for the refinery and for cooling the boilers as they run at very high temperatures. 20 million litres of water are needed per day, There are rivers and a dam near Kuhi, which is the place in Vidarbha being suggested by VED, as opined by Pradeep Maheshwari, VP-VED, who initiated the refinery project.
3) Coal for a coal-fired power-plant. Coal could come from WCL but it’s doubtful as it is Govt of India undertaking and diverting it to a refinery may not be possible.
The main ingredient, however, is political support as it’s a national asset, whether it is set up by private of public sectors.
Who can set it up? For an investment of Rs. 70,000 crores for an 18 MT refinery and petro-chemical complex, only the Govt. could step in, not private players.
There’s a good chance as a joint venture with the refinery in Ratnagiri, a 60 million tonnes (MT) refinery. Gupta made the practical suggestion of having a part of that in Vidarbha. The one in RatnagIri along with the one in Vidarbha could be 30 MT each. Even getting insurance for one single plant in one place for such a big project is very difficult.
In port-based refinery (Ratnagiri) it is easy, but in the hinterland (Vidarbha) putting up a pipeline up to the port is not easy. Right-of-way is needed for the pipeline along highways and if that happens then it’s fantastic, otherwise, it could be a big problem. Govt. would like to assist you as they don’t need to spend.
If land, water and coal can be made available, with two mother units (Ratnagiri and Vidarbha) it is feasible. Since it brings tremendous growth, a petro-chemical complex, along with downstream units around the area, could transform Vidarbha in 10 years, and Vidarbha would become a different Vidarbha altogether if it is diverted from Ratnagiri. But, Gupta reiterated time and again, that Govt. and political support are a must. Central and State Govts. have to see eye to eye, only then it is possible. Port-based or hinterland-based is not an issue at all. In design, implementability, viability there’s no difference in Ratnagiri or Vidarbha; in fact, Gupta felt that Vidarbha would be better.
Direct employment would be 2 – 2,500 (they employ only officers, no labourers) and direct, indirect and downstream, all-inclusive, would be massive employment of a lakh of people. Gupta felt that environmental impact and global warming were not great issues as the coal used in the power plant has the lowest sulphur content. He felt eventual that visionary leadership was the most needed component for such a large project taking off.
Earlier, Shivkumar Rao, President, VED made the opening remarks, Anil Rathi, Chairman – New Investments & Emerging Opportunities Forum of VED, introduced the speaker, and Varun Vijaywargi, Secretary-General, VED, proposed the vote of thanks.