Chennai Petroleum proposes JV to Indian Oil for Cauvery refinery project

The Board of directors of Chennai Petroleum Corporation Limited (CPCL) has proposed the implementation of the 9 MMTPA Refinery Project at Cauvery Basin Refinery, Nagapattinam district, to the Board of Indian Oil Corporation Limited (IOCL). CPCL plans to do this through a joint venture, at an anticipated cost of Rs 28,983 crore.

This project encompasses a polypropylene unit apart from the refinery complex. The refinery complex will provide impetus for economic development of the region. As a preparatory step, operations at the refinery were ceased starting April 01, 2019. CPCL entered into a MoU with Government of Tamil Nadu for availing a structured package of incentives. Its request for additional land acquisition has also been permitted by Government of Tamil Nadu and Pondicherry.

CPCL and IOCL together will be holding 25 per cent stake each in the joint venture and the remaining 50 per cent would be held by a strategic/financial/public investor. The Board of CPCL has given in-principle approval to invest an amount till about Rs 2,500 crore in the joint venture, subject to required authorizations.

CPCL has two refineries located at Manali and Nagapattinam with a combined refining capacity of over 11.5 million tons per annum (MMTPA). Its main products include LPG, motor spirit, high-speed diesel, naphtha, bitumen, superior kerosene, aviation turbine fuel, lube base stocks, paraffin wax, hexane, fuel oil and petrochemical feed stocks.

IOCL is engaged in refining business and its segments include sale of petroleum products, sale of petrochemicals and other businesses. Its other businesses segment includes sale of gas, explosives and cryogenics, wind mill and solar power generation, and oil and gas exploration activities.

Chennai Petroleum’s stock rallied 6 per cent to Rs 60 on Thursday, from its previous close of Rs 56.60 on BSE.