Oil marketing company, Indian Oil Corporation (IOCL) is all set for capacity expansion of the Paradip crude oil refinery to 20 million tonne per annum (mtpa) from current 15 mtpa, notwithstanding the stand-off from the Odisha Government over grant of fiscal incentives.
Though oil industry works on a lower margin, the company intends to expand the refinery capacity by investment of Rs 4500 crore for upgradation that will roll out petroleum products complying with the new BS IV norms. The capacity expansion will bring about better cash flow generation and thereby better operating profit margins.
Earlier Odisha Government had offered deferment in VAT by Paradip for 11 years in 2004 and ensured commercial feasibility. The capacity of 9 mtpa was later increased to 15 mtpa. However, the company achieved expansion but witnessed delay in commissioning of project which provoked Odisha Government to withdraw incentive.
However, IOCL would continue with the expansion and progress of its petrochemical complex will remain unhindered as it has invested Rs 35000 crore in the refinery and is expected to invest Rs 34000 crore in the petrochemical complex.