Indian Oil Corp (IOC) and Mitsubishi Corp are teaming up in order to build a 500 MWe power plant will burn refinery residue. The plant, to be built at Savli near Baroda, will burn waste from the IOC’s Gujarat refinery.

The German company STEAG is to prepare a detailed project study and assist in selecting a contractor for the station. The two major parties in the thermal power plant will each hold an equity stake of 26 per cent. Other institutions will be offered the remaining 48 per cent. The project is expected to cost $447 million.

The power plant is due for completion 33 months after financial closure. Electricity produced will be sold to the Gujarat Electricity Board.

The project is part of IOC’s plan to diversify into power and become an integrated energy company. It plans to set up refinery-based power projects in Haryana, Punjab and Gujarat.

IOC is also planning to make significant investments in expanding its refineries in Gujarat and Haryana. Meanwhile, the government is expected to reduce its stake in IOC from 80 per cent to 70 per cent.