Numaligarh Refinery Expansion Project Faces Budget Increase

Budget Revision for Numaligarh Refinery Expansion

Numaligarh, Feb 24: The projected cost for expanding the capacity of Numaligarh Refinery Ltd is anticipated to rise by approximately ₹5,900 crore, bringing the total to around ₹34,000 crore.

The largest refinery in Northeast India has submitted a request to the central government to increase the budget for the Numaligarh Refinery Expansion Project (NREP), a brownfield project, from ₹28,026 crore to ₹33,901 crore. This proposal is currently under "active consideration" by the Public Investment Board (PIB), according to company representatives.

Initially, the approved budget for the project was ₹28,026 crore, but it has now been revised to ₹33,901 crore. The request for this budget increase has been forwarded to the Union Ministry of Petroleum and Natural Gas (MoPNG) for their approval.

The expansion aims to boost the refinery's capacity from 3 million metric tonnes per annum (MMTPA) to 9 MMTPA and is expected to be finalized by December 2026.

According to a senior official at NRL, the expansion work is progressing rapidly, with around 85% of the project completed and an estimated ₹27,601 crore already spent.

Pranjal Pathak, the general manager (Project) of NREP, confirmed that the proposal for budget enhancement is currently under review by the PIB.

The NREP also encompasses a 1,635-km crude oil pipeline with a capacity of 9 MMTPA from Paradip to Numaligarh, a 610-km product pipeline of 5.5 MMTPA from Numaligarh to Siliguri, and multiple storage tanks for crude oil and refined products.

NRL, classified as a “Navaratna” entity, initiated the NREP in 2019 with a significant investment of ₹22,594 crore in the Northeast, aiming for completion within four years, targeting 2023.

In November 2021, NRL reported that the project cost had increased by ₹5,432 crore to ₹28,026 crore due to the implementation of advanced technologies.

Pathak explained that the budget increase is attributed to several factors, including delays caused by the COVID-19 pandemic, rising procurement costs due to vendor price hikes, and increased expenses due to heavy monsoon rains.

The funding for the project is structured as a mix of debt and equity, with a ratio of 70:30, supported by a consortium of 12 banks led by the State Bank of India.

Upon completion, the refinery is expected to produce 1,956 MMTPA of motor spirit, up from the current 384 MMTPA, 5,270 MMTPA of high-speed diesel compared to the existing 1,900 MMTPA, and 560 MMTPA of LPG, an increase from the current output of 60 MMTPA.

Additionally, the state-run refinery is working on a polypropylene project with a capacity of 360 KTPA, estimated to cost ₹7,231 crore.

NRL has also outlined a strategy to achieve net-zero emissions by 2038. In alignment with the National Green Hydrogen Mission, the company is taking steps to establish a green hydrogen plant with a capacity of 300 kg per hour (18 MW) within the refinery.

Currently, Oil India holds a 69.63% stake in NRL, while the Assam government and Engineers India own 26% and 4.37%, respectively.

The company's authorized capital stands at ₹5,000 crore, with a paid-up capital of ₹1,759 crore.