LIOC diversifies into petrochemicals

Seeks to reduce reliance on auto fuels:

By Chandani Jayatilleke

The Lanka Indian Oil Corporation (LIOC) is getting into new areas such as petrochemicals as it seeks to diversify its business, LIOC Managing Director Shyam Bohra said.

“We have already received all the approvals and will soon start,” he told Business Observer. “We will be importing the products and tying up with suppliers globally and expand in the market.”

The company, a subsidiary of the Indian Oil Corporation, which last week announced big new investments to expand business, including refining and petrochemicals, has been trying to reduce reliance on auto fuels whose prices are controlled by the government, forcing it to incur losses on retail sales from time to time.

“Petrochemicals such as naphtha and other materials, are offshoot products of petroleum refining with which you make plastics and packaging materials,” Bohra said. “We have already done our homework and got a paper from the consultants and have prepared logistics and distribution channels. We will start in a month or so at the most.”

LIOC has said it has already diversified into other businesses such as lubricants, bunkering and bitumen which are making an increasing contribution to sales and profits.

Getting into petrochemicals will enable the company to better exploit the hydrocarbon value chain, he said. Petrochemicals, which provide the raw materials for a range of products used in households and industry, have been identified as a prime driver of future growth by the Indian Oil Corporation. LIOC’s parent firm, Indian Oil Corporation, India’s biggest refiner, last week announced major new investments in expanding its refining capacity and product portfolio including a planned capital expenditure outlay of US$ 257 million in petrochemicals for 2016-17. IOC Chairman B. Ashok told reporters in Bombay last week that in the next six years, the company needs to spend Indian Rs. 1.70-1.80 trillion on refinery expansion, new petrochemical projects, natural gas and exploration.

Indian Oil also hopes to add about 24 million tonnes of refining capacity a year. “We have seen the enormous potential in petrochemical marketing,” IOC Chairman B. Ashok said in his message to the firm’s 57th annual general meeting.