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As Gujarat dithers on 'green' signal, Bina refinery project cost rises by Rs 20 bn!

Prashant Jain in Bhopal

The project cost of the proposed oil refinery at Bina, a joint venture of India and Oman, has shot up by Rs 20 billion with the Gujarat government dragging its feet on giving environmental clearance for laying a 16 km crude oil pipeline.

The project to be set up at Agasod near Bina in Sagar district of Madhya Pradesh, has been waiting for the green signal for laying a 7 km-long pipeline in sea and a 9 km-long pipeline in soil respectively. The foundation stone was laid in 1995 by the then prime minister P V Narasimha Rao about four years ago.

Official sources said that the delay has led to cost overruns by about Rs 20 billion to the present estimates of Rs 74 billion from its original cost of Rs 54 billion. An annual price escalation of Rs 5 billion may force the authorities concerned to wind up the project, the sources claimed.

They said the entire project has run into rough weather as the project implementation could start only after receiving necessary clearances.

The sources claimed that the present delay was irrational as another company has already laid a pipeline in the same area.

A 940 km cross-country crude oil pipeline, with intermediate booster pumping stations, is to be constructed from Agasod to Vadinar, located in coastal area in Jamnagar district of Gujarat. Of this, 430 km pipeline is proposed in Madhya Pradesh while the remaining 510 km is to be in Gujarat.

As per the project proposal, crude oil from Oman will be brought by ship to the sea near Vadinar in Jamnagar district of Gujarat from where it will be carried to Agasod through the pipeline. Out of this, the crude oil will pass through a seven km long pipeline to be laid in the sea.

''The Gujarat government has been dilly-dallying on the project on the pretext of wildlife conservation,'' the sources said. Under no circumstances, this 16 km-long pipeline could be diverted through some other place as experts have said that such a move would not be technically feasible, they added.

During his visit to Oman in September last year, Prime Minister Atal Bihari Vajpayee had assured that all the approvals related to the project would be cleared within 45 days as no technical hindrance was existing for its approval.

Oman has exhibited a positive attitude so far. But it might retract from the project if the delay continued, the sources said.

A joint venture company -- Bharat Oman Refineries Limited was formed for the project. It comprises two 26 per cent stakes of Bharat Petroleum Corporation Limited and Oman Oil Company Limited. The unnecessary delay would send wrong message to foreign capital investors, the sources said.

The project was to be completed by 2002. But it will now take four more years for its completion due to the delay.

The project will not only benefit the backward Bundelkhand area of MP but its petroleum-based products will save a lot of foreign exchange for the country, the sources said.

On its completion, the project is expected to produce six million metric tonnes per annum, petroleum-based products including liquified petroleum gas, naphtha, motor spirit, aviation turbine fuel, superior kerosene oil, high speed diesel, fuel oil, bitumen and sulphur.

Bharat Oman Refineries Limited has also signed a memoranda of understanding with the companies of the United States, Holland and France to work on the project.

The project has incurred an expenditure of about Rs 1.5 billion for wire-fencing and for laying a 7.5 km-long road from the highway to the project site, the sources added. About 3,000 acres of land have been acquired and compensation distributed to the affected people.

UNI

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Madhya Pradesh