Chennai Petroleum Corporation Limited (CPCL), the Rs 8636 crore giant from Tamil Nadu is the leader in the field of petroleum refining, is now moving over to value-added products, and finding better use for its residues by setting up a power plant. In an exclusive interview with Sify.com, Mr. S V Narasimhan, Managing Director, CPCL, unveils his plans for a desalination plant, and a power plant to ramp up the profitability of the unit.

Excerpts from the interview:

How is the company facing the sluggish demand in petroleum products?
You may be aware of the supply-demand scenario in India. Our refining capacity is in excess of local requirements. We are not importing petroleum products anymore, except LPG. We have sufficient indigenous capability to meet domestic demands. In fact, the domestic diesel demand has come down due to various reasons.
So, if the demand is going to be more or less like previous years', the scope for volume increase is less. That’s why we decided to increase production of value-added products and maximise profits.

How are your expansion plans going?
An expansion project at a cost of Rs.2360 crore is currently under way. When completed, it would increase our capacity by three million tonnes. More than increasing capacity, it is going to totally change the quality of our products. Our products would conform to Bharath Stage II and Euro III equivalent specifications, which will be made mandatory from April 1 2005.
We are having plans to cut down wastage to increase profits. With this project we hope to bring down residue by at least seven percent by increasing production of high value products from the 67 percent to 73-74 percent.

Your emphasis on high value products seem to be paying off. But what are your benchmarks?
Global standards would be around 80-81 percent. We would come close to international standards when we increase production of high value products to 73-74 percent and then add our oil-based stock configuration and wax output to the total value.

What are the other projects in the pipeline?
The residue which we produce has a high sulphur content. Right now, sulphur is being used as a fuel oil. The days are not far when people will dump sulphur and start using gas. So we have to find a way to dispose of this residue. That’s how we thought of this power project, where we could use sulphur as feed for generating power. Instead of coal or lignite it can be used for producing power.

Where do you plan to set up the power plant?
We are planning to set up the plant at a land close to our refinery. We have discussed this project with another public sector undertaking, Neyveli Lignite Corporation, who are experts in producing and distributing power. The power generated would be around 500 MW and the power produced would go into the grid. As far as CPCL is concerned, our requirement is met from captive power plants.

What happened to your plans to have oil jetty in Ennore port?
Chennai port does not have facilities for berthing huge tankers. If we could bring crude in larger tankers, we could save a lot of money on freight rates. These are some of the reasons we want to have a jetty in Ennore, which is also closer to our refinery. But now, Chennai port officials have given us a new deal. They have agreed to reduce wharfage charges from Rs.33 per tonne to Rs. 10 per tonne. The new rates would take effect from April 2005.

Water scarcity in Chennai must be causing you problems. What are your plans for your desalination plant?
We spend a lot of money on water. Two years ago, we shut down our refinery for a month due to water scarcity.. Metrowater was not able to provide water and there was no alternate source to provide such huge volume of water. Now Metrowater has increased water charges. We have asked them to reduce it. In any case, we have drawn up plans for setting up a Rs 200 crore desalination plant. We have prepared a detailed project report and our board has approved it. The desalination plant would be set up somewhere near the sea because 60-70 percent of water drawn has to be discharged back into the sea.

How do you relax?
On Sundays, I am always at home with family. I enjoy cooking on Sundays. I ask my wife to take rest and do the cooking myself. We were in north India for many years. So in our family we relish all kinds of Indian foods.

P C Vinoj Kumar