The three government oil marketing companies (OMCs) - Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) - might jointly set up a mega refinery at Ratnagiri in coastal Maharashtra.

According to informed sources, the refinery having a capacity of 30 million tonnes per annum (mtpa) would be set up at a cost of Rs 60,000 crore.

Although Dharmendra Pradhan, minister for petroleum and natural gas, declined to divulge the details of the equity participation by the OMCs, sources said IOC could take a majority stake, as it is the largest refiner in the country and has more markets to feed.

Pradhan said: "Soon, the three OMCs will prepare a feasibility report on this proposal and engage a good consultant to plan the refinery. I promised Maharashtra chief minister Devendra Fadnavis that by 2017, we would have a plan for an important refinery in Maharashtra."

In return, Fadnavis assured Pradhan of full support. "Our government would help you in land acquisition and other clearances required for the refinery. We would ensure a hassle-free process for setting up of the refinery."

He made the announcement while dedicating to the nation a crude distillation unit (CDU) of BPCL's Mumbai refinery. The CDU was installed at a cost of Rs 1,419 crore and would save the company Rs 128 crore a year on fuel consumption.

Maharashtra has two existing refineries - HPCL's 5.5 mtpa refinery and BPCL's 12 mtpa refinery.

HPCL and BPCL have both been facing the problem of expansion at the existing refineries as they are landlocked. While BPCL wanted to set up Bina refinery in Madhya Pradesh to expand capacity to 15 mtpa, HPCL's expansion has hit a roadblock due to clearances.

HPCL had decided in 2010 to set up a 9 mtpa refinery in Maharashtra's Ratnagiri district, but the region was declared ecologically sensitive, putting the plan in jeopardy. The moratorium for the Maharashtra project was up to 2014.

A year after it elapsed, the company says it has no clue about the future of the project.

Another refinery planned by HPCL at Pachpadra in Barmer district of Rajasthan two years ago, has not seen work starting. IOC, the nation's biggest refiner, on the other hand, has been planning to set up a new refinery on the west coast for some years now. IOC had supposedly zeroed in on Gujarat and Maharashtra as two locations for its new refinery. But, no destination has been finalised as yet.

IOC has seven refineries with a total capacity of 54.2 mtpa and its subsidiary Chennai Petroleum operates an 11.5-mpta refinery.

According to the International Energy Agency, energy demand in the country will double in the next 25 years, which will necessitate a massive $2.8 trillion in investment in facilities, or $110 billion annually.

"Energy demand will double by 2040 as the economy will grow to five times its current size. A six million barrels per day rise in oil use is the largest projected for any country's oil demand as 260 million new passenger vehicles will be added," Pradhan noted.