Reliance Industries, in its board meeting on 23
January 2006, stated that the Jamnagar petroleum refinery expansion project
would be implemented through Reliance Petroleum Ltd, a newly formed wholly-owned
subsidiary of RIL.
The Rs.25,000 crore ($6 billion) project
envisaging a petroleum refinery of 27 million tpa and a 1 million tpa
polypropylene plant will be housed at the Jamnagar Special Economic Zone.
Reliance would also raise equity capital either
through private placement or an initial public offering, to part finance the
project. Reliance Petroleum would continue to remain as a subsidiary (though not
fully-owned) after the proposed equity raising exercise. The size of the initial
public offering, scheduled for launch in mid-2006, would be Rs.5,000-6,000
crore.
ProjectsToday adds:
In November 2005, Reliance Industries had
announced that it would "shift" its refinery expansion project from the existing
site to the Jamnagar special economic zone. Meanwhile, Reliance invited global
tenders for petrochemical majors to set up their units in the proposed SEZ.
Leading names like Dow Chemicals, Shell, Mitsubishi, etc. reportedly evinced
their interest in the proposal.
Reliance Industries' plan is to expand its
refining capacity to 60 million tpa from the existing 33 million tpa. This would
be achieved by adding a new unit of 27 million tpa located in an area now
designated as a special economic zone. This SEZ would also house a 1 million tpa
downstream polypropylene unit.
The fact that the refinery is located with an SEZ,
the project would benefit from several tax concessions including zero customs
duty on capital goods imports. It is estimated that the refinery cost ($6
billion) is around 40 per cent of what it could have been if set up in a
"domestic tariff area".
Project Update: UOP (Universal Oil
Products of USA), ExxonMobil and Foster Wheeler have been appointed as
technology licensors, while Bechtel is the EPC and project management
contractor. As of mid-January 2006, around 50 per cent of the front-end
engineering had been completed. Construction work on the site is likely to start
soon. The refinery is headed for completion by March 2008.
The developer of the special economic zone would
be Reliance Projects & Engineering Associates Pvt Ltd, another group company.