IndianOil set to exceed 12th Plan capex of Rs 56,200 crore

IndianOil Corporation (IOC), the nation’s largest fuel retailer, is set to exceed its capital expenditure target of Rs 56,200 crore for the 12th Five-Year Plan. The company has already spent Rs 40,353 crore to ramp up capacity. With both petrol and diesel prices freed and the implementation of cash transfers to curb the cooking gas subsidy, IOC has a capital expenditure target of Rs 10,540 crore for 2015-16. “We have two years to go for the plan to be over. We will probably exceed the 12th Plan target,” Chairman and Managing Director B Ashok told Business Standard.

IOC has spent an average Rs 15,000 crore in the previous two financial years and wants to sustain that pace. The investments were made in refineries, upgradation and pipelines, Ashok said.

“IOC’s investments are envisaged for projects such as the 15 million tonne per annum grassroots refinery under commissioning at Paradip, fuel quality upgradation and expansion projects in refineries, augmentation of pipelines and marketing facilities and bulk storage installations,” the firm told Business Standard.

The rest of the expenditure has been lined up for value addition and yield improvement projects in petrochemicals, including a polypropylene project at Paradip, and setting up an LNG import terminal at Ennore, apart from overseas and domestic oil and gas exploration and production activities. IOC recently approved five projects, including a Rs 5,151-crore LNG import terminal at Ennore, a Rs 2,321-crore Paradip-Hyderabad pipeline, Rs 1,823 crore for augmenting the capacity of the Paradip-Haldia-Durgapur LPG pipeline, Rs 887 crore for the Jaipur-Panipat naphtha pipeline, and a Rs 690-crore LPG import facility at Paradip.

The company is simultaneously implementing six projects, including the Rs 34,555-crore Paradip refinery and a Rs 3,150-crore polypropylene project at the same location, and a Rs 3,076-crore project to improve distillate yield at its Haldia refinery.

The investment push comes on the back of a historic slump in global crude oil prices that, coupled with market-driven fuel prices, has lowered under-recoveries of oil firms.

IOC posted a two-and-a-half times jump in its net profit at Rs 6,435 crore during the June quarter on higher refining margins and inventory gains.

The gross refining margin increased to $10.77 per barrel during the quarter from $2.25 per barrel in the same quarter a year ago. IOC registered Rs 3,218 crore in inventory gains, including Rs 2,395 crore on crude oil, in the June quarter.