The Indian Oil Corporation (IOC) is the country’s biggest
crude refiner. It operates 10 out of 22 refineries in India
with a combined capacity of 65.7 mmtpa which is 31 per
cent of the country’s total refining capacity. The corporation
is also setting up its biggest refinery so far at Paradip at
an investment of more than `30,000 crore. However, the
company is also in an expansion mode and is keen to
venture into gas business. IOC’s Director (Refineries),
RajKumar Ghosh shares the company’s ongoing and future
plans with Neeraj Dhankher. Excerpts.
The 15-mmtpa Paradip refinery
project in Odisha has been
delayed by close to two years.
What are the reasons? What is
the current completion schedule
for the `30,000 crore project?
The commissioning schedule for the
refinery is from June to September
2014. We had various problems till July
2012 which have now been overcome.
There was law and order problem as
well as delays in getting forest and
environment clearance. As the project
got delayed, many of the contractors felt
that the price quoted by them earlier was
low. So there are problems of cash flow
for some of the contractors. But there
was also a major delay by the vendors,
especially supply delays. But orders
were placed on time.
At one point, IOC was keen
to set up a petrochemical
complex along with the
refinery at Paradip. But the
decision was shelved. What
are your current plans for the
The petrochemical segment will come
up in subsequent phase. We have a
poly propylene project of `3,150
crore which is in Detailed
Once that is
approved by our
board, we will
Not just the
mechanism also seems to be
a worry. The Paradip-Raipur-
Ranchi pipeline which will
evacuate products from the
refinery to the market is also
running behind schedule due to
We are trying to commission a part
of the pipeline project by June 2014
so that the products can be supplied
to marketing terminal. Rest of the
project will be commissioned by the
end of 2014.
How will you evacuate products
from the refinery in the
We will explore the sea route. We
are already putting up a south jetty
for coastal movement of products.
Will the delay in completion
of the Paradip-Ranchi pipeline
impact refinery capacity
Refineries of this magnitude take
time to come in full operation and
utilisation. By the time the refinery is
commissioned, I feel the pipeline will
also be ready. The refinery will not
operate at full capacity from the first
day. It will take time and will happen
only over a period of time as there are
many other units which have to be
commissioned one after the other. So
commissioning of the refinery will be as
IOC was keen to avail a two-year
extension of tax breaks available for refineries so that its delayed
Paradip refinery can avail the
benefit through exemption under
section 80IB (9) of the Income
Tax Act. Have you given up on
Yes, we had written to the petroleum
ministry seeking an extension of tax
breaks available till March, 2014.
However, it did not happen.
IOC and Kuwait have been
discussing various areas
of cooperation. What is the
Yes, they have visited us and we have
had discussions. They are interested
in equity participation in some of our
projects such as Paradip or Paradip
petrochemical complex. Nothing has
been decided as yet, and it is all at an
Are there any talks with Kuwait
on sourcing additional crude for
the upcoming 15-mmtpa refinery
With regards crude sourcing, we have
to get 15 mmt for the Paradip refinery.
We have to source it from different
countries and Kuwait is and will be one
of the major sources for this refinery.
Can you please elaborate on IOC’s
crude requirements for 2014-15?
We are still finalising our plans in this
regard. Our plan is to import around 58
mmt for IOC’s refineries. But we are
not planning our crude import targets
on the basis of throughput. Rather, we
will be focussing on our margins this
time. Many times in the past we have
seen that while we increase our refinery
throughput, there is not much change
in the margins. Hence, now we are
planning on how to make more profit
instead of only increasing throughput.
We are trying to maximise high
sulphur crude processing especially
from Middle East and Latin America.
In terms of suppliers, we are receiving
crude from Brazil, Columbia and
Mexico. We are also trying to import
crude oil from Venezuela. We will also
be receiving cargo from Canada. We are
trying all types of crudes.
IOC is striving to expand itself
in the gas business. How will it
impact the company’s market
share in fuel marketing?
IOC is a refining and marketing
company. But in future, gas business
will displace the liquid volumes. Which
means gas will replace naphtha and
furnace oil and we will lose market
share in naphtha. This is why we
are keen to get into the gas market.
Whatever market share we will lose in
liquid fuel will be compensated by gas.
This way we will continue to retain our
total market share in energy.
What are your capital expenditure
plans for 2014-15?
While Paradip refinery will be
commissioned this year, there will still
be a lot of capital expenditure by way
of payments to contractors, vendors
and licensors. This year (2013-14),
IOC’s capex was around `11,230 crore
for all our business segments, of which
`6,000 crore was for refineries. This
proportion is expected to be the same
next year as well.
Apart from Paradip refinery,
what are the other projects
which will be commissioned in
the near future?
Most of the projects to be commissioned
in near future will be bottom up barrel
upgradation projects, along with
expansion of existing units.