The Hindu : CPCL, CPT reconcile differences, firm up ties

Online edition of India's National Newspaper
Monday, Feb 24, 2003

Business

Business

CPCL, CPT reconcile differences, firm up ties

By N. Ravi Kumar

CHENNAI Feb. 23. This is what competition could do to public sector enterprises. Little over five months after the Chennai Petroleum Corporation Limited announced its intention to opt for the Ennore port, the Chennai Port Trust today is close to strengthening its business ties with the oil company.

Overcoming its apprehensions over the refinery becoming the second `scoop' of the Ennore port after TNEB coal, with some aggressive marketing, the Trust is giving final touches to a fresh agreement with the CPCL. This follows a recent meeting between the port and IOC officials in which both sides "reconciled" several contentious issues, according to a senior Trust official.

The Trust turned down the CPCL's proposal for a penalty clause - for compensating the loss if a pipeline could not be laid before December 2005 - but agreed to procure the right of way from the Tamil Nadu Road Development Corporation for the refinery's new pipeline. The CPCL sought permission within a fortnight. The TNRDC is implementing a road-widening project, funded jointly by the State Government, the National Highways Authority of India and the Chennai Port Trust, on the stretch.

The CPCL, whose 3-million tonne refinery expansion is scheduled for commissioning in July, proposes to replace its existing 36-inch pipeline, from the port to its refinery in the suburban Manali, with a 42-inch pipeline. In August, it announced its plans to set up either a Single Buoy Mooring or construct an "alongside jetty on build, own and operate basis" at Ennore, as the existing pipeline from Chennai port to the Manali refinery may have outlived its purpose by 2006". The CPCL proposed to receive crude in Very Large Crude Carriers at Ennore, as such movements were found to be cost-effective by the Indian Oiltanking Limited.

The estimated cost benefit, however, seems to have gone awry after a recent "competitive" offer by the Trust, dropping wharfage charge from Rs.27 per tonne of crude to Rs.10. The CPCL presently receives around 6.5 million tonnes of crude and 1.5 million tonnes of petroleum products. The Trust had opposed the inclusion of penalty clause to compensate for losses arising out of vessel berthing delay, but allowed the CPCL to manage the loading arm.

Meanwhile, the CPCL's captive oil jetty, which would "take care of receipt of raw material" for its Cauvery Basin Refinery at Panangudi, near Nagapattinam, is scheduled to be commissioned on March 1. The facility, involving 1.4-km jetty and an 8-km pipeline from the coast to the 1-million tonne refinery was established at around Rs.96 crores.

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