The Indian government has raised the cost estimate of the Ratnagiri refinery and petrochemical project by more than 36%, Reuters reported Aug. 6, citing four sources.
The sources said the cost increase is due to a delay in acquiring land for the project and that all calculations need to be revised. In November 2018, Chief Minister of Maharashtra Devendra Fadnavis told Reuters that the acquisition of land for the project was put on hold following opposition from farmers.
According to Reuters, the Ratnagiri refinery, which was originally located in the Indian state of Maharashtra, is now expected to be built at Roha in the Raigad district near Mumbai, India. It is designed to be the largest single-location refinery complex in the world, capable of processing 1.2 million barrels of crude oil per day.
The new cost estimate of $60 billion was given to Saudi Arabian Energy Minister Khalid al-Falih at a meeting with Indian Oil Minister Dharmendra Pradhan in July, sources told Reuters. The estimated project cost was $44 billion at the time of the deal signing between an Indian consortium and Saudi Arabian Oil Co., or Saudi Aramco, in 2018.
The $60 billion figure is a "preliminary estimate" and that the final value "will be decided on the basis of a detailed feasibility study," a source present during the meeting told Reuters.
However, the sources said the project is still expected to be commissioned in 2025 despite the increase in costs.
Ratnagiri Refinery and Petrochemicals Ltd. is the joint venture company in charge of building the project. A consortium among Indian Oil Corp. Ltd., Bharat Petroleum Corp. Ltd. and Hindustan Petroleum Corp. Ltd. holds a 50% stake in the company, while the remaining 50% is divided between Saudi Aramco and Abu Dhabi National Oil Co.