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Indian refiner MRPL MRPL.BO to treble capacity

BOMBAY: India's newest oil refinery has stabilised production in the southern port city of Mangalore and plans a major expansion to treble its capacity, a top official said.

"We are processing about 6,000 tonnes (of crude) per day now," Jagdeesh Mehta, managing director of Mangalore Refinery and Petrochemicals Ltd (MRPL) said in an interview.

The refinery is designed to process three million tonnes of crude annually, and Mehta said it stabilised within a week of going onstream in late March.

MRPL's products are marketed by the state-run Hindustan Petroleum Corp Ltd (HPCL) HPCL.BO.

HPCL owns 26 percent of MRPL, with the rest owned by the private sector. The Aditya Birla Group, a leading Indian business house, has 26 percent and the rest is publicly-held.

Mehta said MRPL planned to treble capacity to nine million tonnes at an estimated cost of 37 billion rupees (US$1.08 billion).

The expansion is expected in three years after approvals are received. Approval from India's cabinet is expected after a new government is installed following the country's general elections, which end on May 30.

Mehta said MRPL planned a public issue at a premium to partly finance the expansion after final approval was received. The details would be worked out only after cabinet approval.

Mehta said MRPL will restructure its capital to achieve a debt-equity ratio of 2.5 to one in the second phase, which will see the capacity increase to nine million tonnes. MRPL began with a debt to equity ratio of four to one.

Analysts had said the existing debt-equity ratio of MRPL put it at a disadvantage when compared with refineries planned by Reliance Petroleum RLPT.NS and Essar Oil ESRO.NS, which will be the first private refineries in the country.

Reliance Petroleum is building India's largest refinery on the western coast with a capacity to process 15 million tonnes of crude a year. Essar is building a nine million tonne refinery, also on the western coast.

Reliance and Essar applied to build refineries after the government allowed 100 percent privately-owned refineries as part of the economic reforms launched in 1991.

MRPL, which was conceived in the pre-reform years, had applied to establish a six million tonne refinery but the government asked the firm to build a three million tonne refinery instead, Mehta said.

Oil analysts said India's demand for petroleum products grew at around 10 percent for the year ended March 31, 1996 compared with six percent per annum in previous years.

India has three major state refineries and several small state-run ones with total daily capacity of as much as 54,000-55,000 tonnes.-Reuter