IOC eyes merchant power biz
New Delhi   26-Apr-2011

Flagship refiner-marketer IndianOil is betting on merchant power business as a way to generate additional income that would help bridge part of losses on fuel sales.

IndianOil has captive power plants at each of its eight refineries, with an aggregate capacity of 1,200 mw. It plans to leverage that infrastructure and expertise to generate power for commercial sale by using pet coke – the last byproduct of refining operations – as fuel.

"We are looking at entering into merchant power business... We have synergy as well as feedstock for that," company chairman Ranbir Singh Butola said on Monday.

IndianOil has made a beginning by signing an agreement with the Assam power utility to sell 5 mw of surplus power from the captive unit at its Digboi refinery in the state.

Butola said the merchant power foray would not take away the company's focus on its core competence of refining and marketing in which it occupies leadership position. "We have to consolidate our position... be strong on home turf."

IndianOil would try to fast-track construction of a facility to import gas in ships (LNG or liquefied natural gas) at Ennore in Tamil Nadu. It is looking at tying up fuel at the earliest.

Butola said the company would also look at value addition projects in petrochemicals business. IOC owns the nation's largest naphtha cracker at Panipat in Haryana and makes polymers for plastics, among other petrochemicals.