The Hindu : Petroleum pipeline launch in March

Online edition of India's National Newspaper
Sunday, Feb 02, 2003

Southern States

Southern States - Karnataka

Petroleum pipeline launch in March

By Our Special Correspondent

Bangalore Feb. 1. The Mangalore-Bangalore petroleum products pipeline will be commissioned in March. The project will help the oil companies make major savings.

The Union Minister for Petroleum and Natural Gas, Ram Naik, told presspersons here today that the 362-km pipeline would cut down transportation cost of petroleum products and natural gas by 70 per cent. The railway line between the two cities was 862-km long, and transportation by road quickly wore out the National Highway no. 48.

He said Rs. 568 crores had been spent on the Rs. 667-crore project. Ninety-six per cent of the work had been completed. As part of the first phase, the throughput of the pipeline would be 5.6 million tonnes a year, and this would be sufficient until 2006. After the expansion under the second phase, the pipeline could deliver up to 8.5 million tonnes a year. The petroleum products delivered could meet the requirements of not only the State, but also parts of Tamil Nadu and Andhra Pradesh, if necessary.

Mr. Naik said the Oil and Natural Gas Commission (ONGC) would purchase the shares of the Aditya Birla Group in the Mangalore Refinery and Petrochemicals Ltd. The Public Investment Board of the Union Ministry of Finance, at its meeting on January 22, approved an investment of Rs. 660 crores by the ONGC in the company, and the Union Cabinet was likely to endorse this decision and grant its approval in about a week. This would pave the way for the revival of the MRPL, which had been incurring losses, and strengthening of the crude oil refining capacity of the country. The investment by the ONGC would give it a 51 per cent stake in the refinery. The financial institutions, which had extended loans to the company, had agreed to restructure the loans by reducing the interest rate, converting part of the loan into equity, and granting a four-year moratorium on repayments.

The MRPL is a joint venture between the Hindustan Petroleum Corporation Ltd. and the Birlas. Initially, it was set up as a three-million tonne refinery and was subsequently expanded to nine million tonnes. The Rs. 10 face value per share of the MRPL would now be purchased by the ONGC at Rs. 2 a share, and thereafter, additional funds would be pumped in to get the company into full-steam production.

He said the ONGC stood to benefit since it would be the first integrated corporation in the hydrocarbon sector with access to crude oil, refinery, and retail network.

The ONGC recently acquired marketing rights for petroleum products with the sanction of 600 petrol pumps. With MRPL, the ONGC could cover the State and parts of Kerala and Tamil Nadu.

Mr. Naik called upon the Chief Minister, S.M. Krishna, to waive the two per cent entry tax on crude oil that arrived at the MRPL. While the State Government had waived the entry tax on the second phase expansion of the MRPL, envisaging an additional crude refining capacity of six million tonnes, the entry tax on three million tonnes of the first phase continued. Waiving this would go a long way in the revival of the MRPL.

He said blending of ethanol with petrol had commenced in several States. Blending of ethanol with high-speed diesel would commence soon. In Karnataka, petrol blended with ethanol would be available from April. The Petroleum Ministry had launched a Rs. 40-crore research project and had signed a memorandum with the Government of Brazil on blending ethanol and diesel. The difference between India and Brazil, however, was that while 80 per cent of the motor vehicles here ran on diesel, nearly 90 per cent of those in Brazil ran on petrol.

Asked about the growing fear of war against Iraq and the consequent impact on the availability of petroleum products, Mr. Naik said there were adequate stocks in the country and there should not be shortage. However, the Petroleum Ministry would send out an appeal to the people, if need be, to save oil in the event of such unforeseen developments.

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