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IOC-Syama Prasad Mukerjee Port tiff hits Haldia project

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KOLKATA : A petrochemical project ‘‘dedicated’’ to the nation by Prime Minister Shri Narendra Modi in the run-up to the Bengal Assembly election is caught in a standoff between two entities controlled by his own government in Delhi.

PM Modi laid the foundation stone of the Rs 1,019-crore venture of public sector Indian Oil Corporation (IOC) on February 7 for a catalytic dewaxing unit at Haldia refinery. The plant, projected to be completed by April 2023, plans to make lube oil base stock, an export substitute product.

Ten months down the line, the oil marketing company is yet to start the groundwork for the plant which it had envisaged to build on a 175-acre plot which at present houses a closed unit of Hindustan Fertiliser Corporation Ltd.

IOC, which reports to the petroleum ministry at the Centre in Delhi, says the owner of the HFCL land, Syama Prasad Mukerjee Port, Kolkata which also reports to a central ministry — ports and shipping — has laid down onerous conditions for the plot.

At a local industry meet organised by the state government earlier this week, an IOC official highlighted the land issue.

“I don’t know if there is anyone here (in the meeting) from the port. We have been requesting them (SMP, Calcutta) for the land for the last one -and-a-half years. We want to build a petrochemical plant, which has a bright prospect. The future expansion is stuck due to the want of land,” Shambhu Chakraborty, general manager HR said at the meeting.

He sought the help of two state ministers present at the meeting and promised local employment if the plant comes up

An IOC official later informed the port has sought a guarantee of 15 million tonne cargo handling through SMP, Calcutta, rent revaluation of the existing land parcels to the market rate. It has also offered the HFCL land at the prevailing market rate.

Port’s counter

The port countered the allegations leveled against it by the oil major. SMP, Kolkata Chairman Vinit Kumar said the port could not possibly lease the plot to IOC because the land is still with HFCL.

“We are awaiting the transfer of the land along with clearance of the pending lease rent due,” he said on Sunday.

Kumar expressed anguish that IOC has been raking up the issue at public forums. “Port land is valuable. It is meant to be given to those who use the port facility. If an industry does not require the water front or proximity to port facilities, it can come up anywhere,” Kumar argued.

“If IOC wants the land, it should give us a minimum guaranteed tonnage. If they are willing, we can give them some concession on the lease rent because as a port, the priority is to enhance cargo movement,” he added.

IOC is in possession of 605.05 acres, out of which 480 acres has been given to the refinery at 99 per cent concession to the market rate.

Another 121.63 acre land was given for the residential zone at a concession of 98.49 per cent.

The land was given by the port at a concessional rate with a mutual but unwritten understanding that IOC’s Haldia refinery would use the port at Haldia. It did so, before constructing a pipeline to the nearest port at Paradip in Odisha.

IOC diverted 12 million tonne of cargo (importer crude oil) from 2008-9 to Paradip from Haldia, saving on the logistic cost to import crude oil as the Odisha port on the sea could handle bigger ships because of deeper draft.

Port estimates it has lost around Rs 1,000 crore on account of port and vessel related charges since 2009-10 over and above Rs 33 crore it lost out every year on account of concessional land given to IOC.

The PSU now handles around 4 million tonne (mt) of cargo annually compared with 14.5mt it handled in 2008-9.

“IOC is a commercial organisation. It had diverted cargo for commercial interest. We suffered. It should now not cringe about paying market rate to the poor port,” a port official said.

Alternatively, it may consider putting up the plant elsewhere if it does not want to use the port facilities, the official added.

Change of guards

When IOC started pitching for the project and lobbying for the land, Dharmendra Pradhan was the petroleum minister and Mansukh L. Mandaviya was the minister for port and shipping.

During the cabinet reshuffle in July both of them were shifted out of their respective ministries.

Hardeep Singh Puri is now at the Helm of the Petroleum Ministry while former Assam Chief Minister Sarbananda Sonowal is the Minister for Ports, Shipping and Waterways.

Pradhan as oil minister had written to the then chemicals and fertiliser minister Sadananda Gowda and minister Mandaviya seeking the land. He also objected to the high price the port was asking, arguing it would make the refinery ‘unviable’.

The correspondence, however, demonstrated that the project was publicly announced even before it had all prerequisites in place.

An IOC official later informed the port has sought a guarantee of 15 million tonne cargo handling through SMP, Calcutta, rent revaluation of the existing land parcels to the market rate. It has also offered the HFCL land at the prevailing market rate.

Port’s counter

The port countered the allegations leveled against it by the oil major. SMP, Calcutta chairman Vinit Kumar said the port could not possibly lease the plot to IOC because the land is still with HFCL.

“We are awaiting the transfer of the land along with clearance of the pending lease rent due,” he said on Sunday.

Kumar expressed anguish that IOC has been raking up the issue at public forums. “Port land is valuable. It is meant to be given to those who use the port facility. If an industry does not require the water front or proximity to port facilities, it can come up anywhere,” Kumar argued.

“If IOC wants the land, it should give us a minimum guaranteed tonnage. If they are willing, we can give them some concession on the lease rent because as a port, the priority is to enhance cargo movement,” he added.

IOC is in possession of 605.05 acres, out of which 480 acres has been given to the refinery at 99 per cent concession to the market rate.

Another 121.63 acre land was given for the residential zone at a concession of 98.49 per cent.

The land was given by the port at a concessional rate with a mutual but unwritten understanding that IOC’s Haldia refinery would use the port at Haldia. It did so, before constructing a pipeline to the nearest port at Paradip in Odisha.

IOC diverted 12 million tonne of cargo (importer crude oil) from 2008-9 to Paradip from Haldia, saving on the logistic cost to import crude oil as the Odisha port on the sea could handle bigger ships because of deeper draft.

Port estimates it has lost around Rs 1,000 crore on account of port and vessel related charges since 2009-10 over and above Rs 33 crore it lost out every year on account of concessional land given to IOC.

The PSU now handles around 4 million tonne (mt) of cargo annually compared with 14.5mt it handled in 2008-9.

“IOC is a commercial organisation. It had diverted cargo for commercial interest. We suffered. It should now not cringe about paying market rate to the poor port,” a port official said.

Alternatively, it may consider putting up the plant elsewhere if it does not want to use the port facilities, the official added.


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