With the PIB approval in hand the Rs 13,000 crore project will be referred to the Cabinet, whose approval is expected within a week's time. While the state-owned Hindustan Petroleum Corporation Ltd (HPCL) will own 26 per cent of the project's equity, another 25 per cent will be owned by the Punjab State Industrial Development Corporation (PSIDC). According to the MoU between HPCL and PSIDC, PSIDC's stake will later be offloaded in favour of HPCL's foreigncollaborator for the refinery, HPCL is expected to sign an agreement with the oil giant Exxon for the refinery -- talks between the two are in an advanced stage. Both HPCL chief HL Zutshi and PSIDC managing director S S Brar have visited the US in September to meet Exxon for this.

According to Petroleum Ministry sources, obtaining the PIB clearance was no easy task, and took over five days and two sittings of the PIB. With the Planning Commission arguing that there was not enough of a demand-supply gap to set up a new refinery -- the last time around, the PIB clearance was rejected because of the Planning Commission's stance -- the Petroleum Ministry had to supply a fresh set of figures to justify the demand-supply gap, particularly in the north and north-west parts of the country -- by the year 2003, a shortfall of 18 million tonnes of petroleum products is expected in this region.

Interestingly, while these very figures were provided by the Ministry to the Planning Commission two months ago, thePlanning Commission argued that private-sector refineries such as Reliance would be augmenting their licensed capacities substantially, reducing the scope for the Bhatinda refinery. The Petroleum Ministry, however, argued that, for example, it would be incorrect to take Reliance's capacity as, say 25 million tonnes, since its name-plate capacity was 15 million. Besides, adding another 10 million tonnes of capacity by the private refineries wasn't as easy as was being made out -- it would require setting up new units and would be a very time-consuming affair.

As part of its exercise to clear the project, the PIB got fresh studies done by the Oil Coordination Committee and Engineers India Limited to evaluate the project's viability. A study was also done to see if it was more viable to transport petroleum products from the Gujarat coast to Punjab, rather than setting up a new refinery. It was found that, to transport the volumes of petroleum products required, a new pipeline would have to be laid as theexisting Kandla-Bhatinda one would not be able to handle this, even after expansion. It was also pointed out that it may not be wise, especially in the light of recent experiences with cyclones in the Gujarat region, to depend completely on refinery capacity in that region.

Badal also told press persons that the project would will receive the crude oil through a pipeline from Mundra Port in Gujarat.

The financial closure for the project is expected to be achieved in about three to four months time and the project would be commissioned in the next five years, Badal said.

He said, the state government was also planning to set up a power project based on the residue fuel at a cost of Rs 3,000 crore near the refinery site. All the clearances were received for the refinery project that would produce petrol, liquid petroleum gas (cooking gas), naphtha, kerosene, diesel and result in a saving of foreign exchange to the extent of Rs 1,859 crore per annum, Badal said.

The state government had acquired 2,000acres of land for the project and had paid Rs 80 crore to the farmers for the same, he said. After the project is commissioned, the refinery is expected to contribute Rs 2,069 crore per annum by way of central excise duty. The project is likely to provide employment to 15,000 people in the state.

Brar said, the refinery project had also received the site and pipeline clearance from the environment ministry. The project will also help in development of other industries such as petrochemicals and small scale ancillary industries.