Numaligarh Refinery – Growing Potential
Numaligarh Refinery Limited has made a name for itself as a major player in the downstream business of refining in India’s northeast. The refinery is known for its high-quality petroleum products and is recognised as a model business enterprise in the region.
Numaligarh Refinery Limited is a Public Sector Enterprise (PSE) under the Ministry of Petroleum and Natural Gas Govt. of India. Bharat Petroleum Corporation Limited (BPCL) holds a major equity stake in the Company with 61.65%, shares followed by Oil India Limited at 26% and the Government of Assam at 12.35%.
“Our refinery started commercial production in October 2000 with a refining capacity of 60,000 barrels per day” remembers S.K.Barua, the Managing Director of the Company. “Over the last 19 years, we’ve been able to establish ourselves as a major player in the oil and gas industry of India and have contributed significantly towards the Government exchequer in the form of taxes and dividends, while sharing profits with our shareholders.”
The Refinery has embarked on a major expansion plan to treble its capacity from 60,000 barrels per day to 180,000 barrels, making use of indigenously sourced as well as imported Crude Oil.
“Presently we are refining Crude Oil available indigenously in North East India. Once our expansion project is completed, we would be importing additional 120,000 bbl/day of Crude Oil through Paradeep Port in Odisha, India which would be refined in this new unit”.
IN THE PIPELINE
The Refinery has several big projects in its anvil with over $4 billion investment in a range of projects over the next four to five years. The first of these is a pioneering outreach into the biofuels sector.
“First and foremost, we’re foraying into biofuel production,” Barua says. “Bamboo grows abundantly in North East India, requiring about three years’ time to mature to its required height. We are utilising green technology to produce bioethanol from nonfood grade bamboo biomass. Bioethanol so produced would be blended with petrol, auguring well with the National Ethanol Blending program of Govt. of India which focusses on reducing emissions for a greener and cleaner India. Being a publicly owned company, this project is naturally in-line with current government targets.
“The Government has an indicative target to achieve ethanol blending of 20% by 2030, and this is a unique project to help attain that goal,” Barua says. “We’re developing the project as a joint venture with Finnish companies. They are 50% partners in this project and we plan to complete it by November 2021.”
“Being located not very far from Bangladesh, we’ve been selling Diesel to them on a regular basis”. Barua says. “We’ve been given a capital grant by Govt. of India to lay a pipeline from Siliguri, India to Parbatipur, Bangladesh. The 130 km pipeline which is currently under construction will place us in an ideal position for trade with our geographically close natural markets in South Asia.”
After 19 years, Numaligarh is finally moving into building their own pipelines.
“This is a huge project,” Barua confides. “We don’t have access to imported Crude Oil, but we’re laying 1,400 km of Crude Oil pipeline from the port to the refinery. This Company is for the first time treading into the pipeline business, and we’ve started recruiting people for this expansion project.”
This project brings some fantastic opportunities with it, but also new challenges, especially within the four-year period that the company has set themselves as a deadline.
Barua explains, “Pipeline laying has a number of challenges. We need to acquire the right of use of land, obtain permission for various crossings including river crossings and railway line and these are time-consuming. Overcoming these challenges involve working closely with the community through which this pipeline traverses”
“The Act under which we can acquire the right of use is very well defined including the compensation payable to the landlord for getting the access of the right of use,” Barua says. “This is only a right of use, not procurement and farmers can keep on farming – in other words, no farmland is getting urbanised nor is there any change of land use pattern”.
A MARGIN OF QUALITY
As Numaligarh Refinery Limited sets foot into new domains, the Company’s reputation will continue to be built on a foundation of quality.
“Well, I can’t specify one single USP for the growth of this company. We started our journey 26 years back when we constructed this greenfield refinery and because of its excellent configuration, we had been able to operate the plant at a very high distillate yield. Maybe because of our transparency in operation, there is a strong perception here regarding the purity of the auto fuel and commercial drivers do prefer to fill up their tanks from our outlets, now operated by BPCL our holding company, and probably is the USP of Numaligarh Refinery Limited, at least in North-East India.
Barua says, “Our refining margin is high, one of the highest in India but since we have not been able to run at full throughput because of non-availability of indigenous Crude Oil, our bottom lines suffer. Our products meet the highest international standards. NRL’s wax plant is the single largest producer of paraffin wax in India. We’re competing with the Chinese in the global market, exporting to 35 different countries including Europe where the quality requirements are much more stringent.”
Of course such quality does not come from anywhere, it comes from the talented people that make up the company.
“So far as recruitment goes, it happens at entry-level, taking people in as they academically qualify,” Barua says. “Because it is a chemical process industry, it’s driven primarily by engineers. As we are a government company, Government of India fixes our pay structure. There is an incentive scheme and since we have been able to maintain a healthy profit year-on-year, we’ve been able to give generous bonuses to our employees.”
It’s a talent pool the company will need, as there are exciting times ahead.
“There is huge potential for growth in North East India. The Government of India wants to see North East become the new growth engine for the entire country and Govt. is investing heavily in the region,” Barua says. “We’ve borders with Myanmar, China, Bhutan and Bangladesh. We are landlocked, but we have these international borders and huge potential for growth, especially with Myanmar and Bangladesh. So this is a very interesting time for us ahead and we can play a key role in trade with our neighbours, particularly in Oil & Gas business.”