IOCL to invest additional Rs one trillion on petrochem capacity in Odisha

Indian Oil Corporation Ltd (IOCL) aims to invest Rs one trillion more in Odisha to expand its presence in the state. The fresh investment would be devoted to setting up of petrochemical units, notably a naphtha cracker unit.

“IOCL has already invested Rs 35,000 crore on its crude oil refinery at Paradip. Of late, they have submitted a plan to invest an additional Rs one trillion. To fulfill its expansion, it has asked for 4,000 acres of land close to its refinery site,” said an official source.

The latest investment intent promises to catapult IOCL to the status of the biggest committed investor in Odisha. If the investment plan goes through, IOCL will surpass Jindal Steel & Power Ltd (JSPL) as the biggest investor. JSPL plans to scale up its Odisha investment to Rs one trillion by 2030, to ramp up its integrated steel capacity at Angul from six million tonnes per annum (mtpa) to 20 mtpa. Naveen Jindal-controlled JSPL has already pumped in Rs 45,000 crore in Odisha. The other key investment in the pipeline is a 12 mtpa greenfield steel plant at Paradip proposed by Sajjan Jindal-controlled JSW Steel, which has unveiled an investment package of Rs 55,000 crore on the steel plant alongside attendant infrastructure.

For IOCL, the expansion in Odisha is likely to trip on land acquisition issues. Land identified to accommodate IOCL is mostly in the clutch of private landowners. “Only 800 acres have been acquired in the vicinity of IOCL refinery at Paradip. The balance land needs to be acquired from private owners”.

IOCL did not respond to Business Standard's email queries.

The next phase of expansion will see the establishment of a naphtha cracker unit, which is expected to draw key investors in the petrochemicals downstream space. The unit will help maximise the production of ethylene, propylene, butadiene and aromatic cuts. These will work as feedstock for a host of industries that could serve the increasing demand of petrochemical products in the country across sectors such as textiles, polymers, pharmaceuticals and specialty chemicals.

Of its planned petrochemical complex. IOCL has commissioned 0.68 million tonne per annum (mtpa) polypropylene unit at a cost of Rs 3,150 crore. The second unit of the complex -- a 0.35 mtpa mono ethylene glycol (MEG) plant -- is estimated to cost Rs 5,654 crore. The IOCL board has also approved the setting up of an integrated PX/PTA (paraxylene/purified terephthalic acid) plant at Paradip refinery. PTA is used as an input in the manufacture of polyester staple fibre, polyester filament yarn and PET bottles. Estimated to cost Rs 9,137 crore, the 1.2 mtpa plant will pave the way for setting up a plastics park in Odisha.

Alongside petrochemical units expansion, IOCL aims to expand capacity of its coastal refinery at Paradip from 15 mtpa to 25 mtpa.