Constituency pampering is back in vogue. The petroleum ministry has given its tacit endorsement to a proposal in which state-owned Bharat Petroleum Corporation will be asked to start work on a crude oil refinery project at Kathora in Amethi, the high-profile Lok Sabha constituency represented by Rahul Gandhi.
A preliminary report for the refinery was recently forwarded by Petroleum Minister Mani Shankar Aiyar's office to Pulok Chatterjee, joint secretary in the Prime Minister's Office, and to the officer on special duty in the National Advisory Council with a request to forward it to Congress President Sonia Gandhi and her son Rahul.
The study, conducted by an individual, Suhel Haider, says Kathora is a central location to service major eastern Uttar Pradesh cities.
The report does not have any reference to the likely benefits that the company may get out of setting up a refinery at Kathora or any other location of Amethi constituency.
BPCL Acting Chairman and Managing Director Ashok Sinha has been asked to take necessary action in this regard. "BPCL may be forced to spike its plan for the Bina refinery in Madhya Pradesh if it is forced to look at Amethi," said a company executive.
The report claims that a refinery at Kathora, which is close to major commercial towns of eastern Uttar Pradesh and western Bihar, will help save on transportation cost for finished products but oil company executives argue that the carriage cost for crude oil will be huge.
"Crude oil will need to be imported at Gujarat ports which will mean an additional cost of Rs 1,500-2,000 crore (Rs 15-20 billion) for laying a crude oil pipeline," said an oil company executive. A 1 million tonne refining capacity costs around Rs 1,000 crore (Rs 10 billion).
Inland refineries are not considered viable even in places like Rajasthan where crude oil has been discovered. Oil companies prefer to set up refineries in coastal areas since more than 70 per cent of the country's crude oil requirement is imported.
But the report makes a case for the refinery to come up at Kathora and gives a backgrounder on the members of Parliament and members of the state assemble representing Amethi and Rae Bareli in 1995 and now.
It also reasons that there is not only good road, rail and air connectivity to the place but about 3,000 acres are readily available. Besides, additional land can be made available through relocation of about 360 households.
The proposed site is close to the river Gomti, from where the refinery can extract huge amounts of water, the report says. Water is crucial for location of a refinery and its lack is one of the arguments against a refinery coming up in Rajasthan despite oil discoveries by Cairn Energy.
The report also says that space along Gas Authority of India Limited's Hazira-Vijaipur-Jagdishpur pipeline can be utilised at several points to save land and infrastructural cost for the crude oil pipeline.
The project was originally conceived in the 1990s when PV Narasimha Rao was the prime minister and Satish Sharma was the petroleum minister and member of Parliament from Amethi. But the project did not take off because it was found unfeasible.