New Delhi: The Board of Directors of state-run Indian Oil Corporation (IOC) has approved the setting up of a new greenfield refinery in Nagapattinam in Tamil Nadu, Chairman SM Vaidya told the media during a press conference on Friday. The refinery will have a refining capacity of 9 Million Tonnes Per Annum (MTPA) and will entail an investment of Rs 31,500 crore. The project is a joint venture between IOC and subsidiary Chennai Petroleum Corporation Ltd (CPCL) and is scheduled to be completed within 48 months from the date of investment approval and statutory clearances, said the IOC Chairman.
The Indian Oil Chairman said that 80 percent of the materials and services required for the Nagapattinam refinery will be sourced indigenously to give a boost to Make in India. "The refinery will produce diesel and petrol meeting Bharat Stage VI standards, and 6 percent of the crude processed will go into making petrochemicals. We have kept margins to increase petrochemical production," said Vaidya.
Responding to a question on the funding for the project, the IOC Chairman said that the funding will come mainly from debt. "Our debt-to-equity ratio is quite healthy at 0.6621. We have the appetite for raising debt," Vaidya remarked. In addition to debt, both Indian Oil and Chennai Petroleum will put in 25 percent of the equity portion each and a financial or strategic partner will meet the balance equity, said IOC Director (Finance) Sandeep Kumar Gupta.
Vaidya said that while Chennai Petroleum holds six acres of land, another 6.58 acres of land is in advanced stages of acquisition and the state-run oil PSU expects to obtain land rights by March. Product evacuation from the refinery will take place through two existing pipelines in the region and jetties, utilising the port-based location of the refinery, said the Chairman.
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