PM puts off Panipat kick-off plan

NEW DELHI, JUNE 22: Indian Oil Corporation's efforts to formally inaugurate their beleagured Panipat refinery have taken another blow wit...

NEW DELHI, JUNE 22: Indian Oil Corporation8217;s efforts to formally inaugurate their beleagured Panipat refinery have taken another blow with political developments forcing Prime Minister Atal Bihari Vajpayee to put off his trip on Thursday 8211; with the BJP pulling out of the Haryana coalition, IOC officials advised the PM8217;s office against inaugurating the refinery at the moment.

Anxious officials from IOC have been virtually camping at Panipat to ensure that there is no further trouble at the refinery. The refinery is of great importance to North India, which is the fastest growing source of demand for petroleum products in the country.

The refinery, which was executed by Engineers India Limited EIL, has had a chequered history virtually from day one. While the first foundation stone for the refinery was laid by the late Rajiv Gandhi in Karnal, the refinery never got started for one reason or another. And when it did, it was besieged by all manner of problems. A few weeks ago, there was a fire in some ofits units, and work had to be stopped. The refinery itself was finally commissioned with close to a two-year delay in April 1999.

Soon after it was first partially commissioned in May 1998, the refinery had to be shut down because of a serious problem in its secondary units 8212; the FCCU and the Hydrocracker were not functional. In addition, the Vacuum Distillation Unit VDU, one of the primary distillation units, was also found to be shaking8217; and could not operate at full capacity. And after the VDU was fixed, beleagured IOC officials found that because of over-firing8217;, the furnace had burnt and a new one had to be ordered 8212; replacing the furnace and associated units cost IOC Rs 100 crore. Delays in commissioning the refinery cost IOC an additional Rs 350 crore, since at that time the government guaranteed refineries a 12 per cent minimum post-tax return on the cost of capital.

Following this, there was an on-going battle between IOC and EIL on who was responsible for the delays and the series offiascos there. IOC even transferred 5 senior officials for this 8212; the executive director L K Raina, two deputy general managers and two general managers.