NEW DELHI, JUNE 23: Prime Minister Atal Bihari Vajpayee has asked the Planning Commission to re-examine its opposition to the proposed 9 million tonne petroleum refinery in Punjab. Vajpayee's directive came in the wake of increased pressure from his Akali allies Punjab chief minister Prakash Singh Badal and SGPC chief G S Tohra had met Vajpayee last week, following reports that the Planning Commission had said that there was no need to set up the refinery, as several new refineries were coming up. Vajpayee has also pointed out that, given the massive dislocation of supplies to north India following the Gujarat cyclone, a refinery for north India does appear to make sense. Following Badal's meeting, the issue was also taken up by several Punjab MPs. They also raised the issue again in yesterday's parliamentary sub-committee meeting on petroleum.Apart from the refinery itself, the Rs 12,000 crore project will include a 500 MW power project. The Punjab MPs see the project as one which has the potential tousher in an era of prosperity in a state which has few big industrial projects, and is also power-starved. Reacting to press reports that the Planning Commission's demand-supply estimates showed that there was no scope for a new refinery at Punjab, they have pointed out that, even if true, these numbers do not take into account the specific demand of the northern states which do not have even one refinery at present. The massive dislocation of supplies to north India following the Gujarat cyclone also points to the need to have a refinery for the region over the last week, several petrol pumps in Rajasthan, Punjab and Haryana have been seeing their stocks dry up and have reported `dryouts'. Moreover, given the appalling state of infrastructure, transporting products to the region is also a logistical nightmare.Interestingly, it is not too clear as to how the planning commission reached its estimates showing a surplus capacity. The Sunder Rajan committee, for instance, had estimated a few years ago, thatwhile there would be a surplus of 16 million tonnes of petroleum products in the year 2001-02, the deficit would go up to 6 million tonnes in the year 2006-07, and further to 29 million tonnes by the year 2010-11.More important, this was based on the assumption that all the proposed additional capacity of around 110 million tonnes would come up by the end of the tenth plan. This, however, assumes that large capacities which have been sanctioned as export oriented units will come up next to no progress, however, has been made on these so far. Estimates for even the ninth plan slow a similar demand-supply gap. Even if you assume that Reliance expands its capacity from the current 15 million by another 7, the total capacity by the end of the ninth plan will not exceed 98 million tonnes, still far short of the projected demand of 113 million tonnes. Besides, most refineries operate at around 95 per cent capacity utilisation.Interestingly, this is not the first time that the planning commission has opposeda project on the ground of excess capacity. It had objected to even IOC's 6 million tonnes Paradip refinery on similar grounds - the East Coast project was cleared by the PIB a fortnight ago.
