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Essar Refinery to fuel retail outlets by 2006
Monday, 15 March 2004, 20:30 IST
NEW DELHI: The first among private firms to open petroleum retail outlets in India, the Essar Group is targeting completion of the first phase of its 12 million tonne refinery in 2006 for ready fuel supplies.
Being built at a cost of 
97.54 billion, the refinery complex at Vadinar in Gujarat would include a terminal to handle petroleum products like diesel which is now imported for supplies to domestic bulk customers and the retail outlets.
"In 18 months from April, we hope to complete the first phase of the refinery with a capacity of six million tonnes per annum. It should be ready for commissioning by the first quarter of 2006," J. Mehra, resident director of Essar Group of companies, told IANS.
The second phase of the refinery, to be commissioned by March 2007, would take the capacity to 10.5 million tonnes, expandable to 12 million tonnes.
"So far we have invested around 63 billion in the refinery project, which is 64 percent complete," said Mehra.
Started five years ago, the refinery project had got stalled due to financial problems and environmental issues. With all the issues sorted out, Essar is now working towards having a large network in place by the time the first phase of the refinery is commissioned.
In the last three months since its 13 retail outlets have become functional, "we have been doing double the business compared to state-owned company outlets", said A.N. Sinha, managing director of Essar Oil.
The reason is not difficult to understand, with Essar charging 30 paise less per litre of diesel and petrol sold through its outlets despite having to source supplies from other companies within the country and from overseas.
Sinha attributed the price difference to the operational efficiency leading to cost reduction and the benefits being passed on to the customers.
The company, which has wide interests ranging from steel and power to shipping and oil exploration, is currently supplying 10,000 tonnes of diesel per month in the domestic market.
Essar is planning to open 1,700 petrol pumps across the country, mostly in rural areas, over the next two to three years. It currently has outlets in Gujarat, Maharashtra, Punjab and Chhattisgarh.
"By this year-end, we hope to have over 250 retail outlets operational and are simultaneously enhancing our market share by entering into bulk marketing for transport companies and bidding for tenders for supplies to industries," Sinha said.
Essar has tied up with the Mangalore Refinery and Petrochemicals Ltd (MRPL), a subsidiary of the state-owned Oil and Natural Gas Corporation (ONGC), for diesel and petrol supplies while importing additional quantities of diesel from overseas.
Despite India having excess refining capacity with a total of over 114 million tonnes per annum (MMTPA) and more expected to be added in the coming years, Mehra expressed confidence of the group finding markets within the country and overseas for its refinery products.
To handle overseas trade, Essar Shipping is setting up a terminal at Vadinar, near Jamnagar. This terminal will have all facilities to handle and store petroleum products.
According to Essar officials, with additional refinery capacities being added in expectations of future demands, the only way to survive would be to wrest market share from existing oil marketing companies in case the market does not grow as expected.
In the months ahead, Essar sees competition toughening, with more companies like Reliance and ONGC slated to open retail outlets.
Source: IANS
97.54 billion, the refinery complex at Vadinar in Gujarat would include a terminal to handle petroleum products like diesel which is now imported for supplies to domestic bulk customers and the retail outlets.
"In 18 months from April, we hope to complete the first phase of the refinery with a capacity of six million tonnes per annum. It should be ready for commissioning by the first quarter of 2006," J. Mehra, resident director of Essar Group of companies, told IANS.
The second phase of the refinery, to be commissioned by March 2007, would take the capacity to 10.5 million tonnes, expandable to 12 million tonnes.
"So far we have invested around 63 billion in the refinery project, which is 64 percent complete," said Mehra.
Started five years ago, the refinery project had got stalled due to financial problems and environmental issues. With all the issues sorted out, Essar is now working towards having a large network in place by the time the first phase of the refinery is commissioned.
In the last three months since its 13 retail outlets have become functional, "we have been doing double the business compared to state-owned company outlets", said A.N. Sinha, managing director of Essar Oil.
The reason is not difficult to understand, with Essar charging 30 paise less per litre of diesel and petrol sold through its outlets despite having to source supplies from other companies within the country and from overseas.
Sinha attributed the price difference to the operational efficiency leading to cost reduction and the benefits being passed on to the customers.
The company, which has wide interests ranging from steel and power to shipping and oil exploration, is currently supplying 10,000 tonnes of diesel per month in the domestic market.
Essar is planning to open 1,700 petrol pumps across the country, mostly in rural areas, over the next two to three years. It currently has outlets in Gujarat, Maharashtra, Punjab and Chhattisgarh.
"By this year-end, we hope to have over 250 retail outlets operational and are simultaneously enhancing our market share by entering into bulk marketing for transport companies and bidding for tenders for supplies to industries," Sinha said.
Essar has tied up with the Mangalore Refinery and Petrochemicals Ltd (MRPL), a subsidiary of the state-owned Oil and Natural Gas Corporation (ONGC), for diesel and petrol supplies while importing additional quantities of diesel from overseas.
Despite India having excess refining capacity with a total of over 114 million tonnes per annum (MMTPA) and more expected to be added in the coming years, Mehra expressed confidence of the group finding markets within the country and overseas for its refinery products.
To handle overseas trade, Essar Shipping is setting up a terminal at Vadinar, near Jamnagar. This terminal will have all facilities to handle and store petroleum products.
According to Essar officials, with additional refinery capacities being added in expectations of future demands, the only way to survive would be to wrest market share from existing oil marketing companies in case the market does not grow as expected.
In the months ahead, Essar sees competition toughening, with more companies like Reliance and ONGC slated to open retail outlets.
Source: IANS