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IOCL, Odisha govt should moderate stand to settle incentive row: Pradhan

Odisha CM Naveen Patnaik was hopeful of reaching a settlement with IOCL

Jayajit Dash  |  Bhubaneswar 

Indian Oil Corporation
Indian Oil Corporation logo outside a fuel station. Photo: Reuters

Union Minister for Petroleum & Natural Gas has suggested that both (IOCL) and the government need to soften their demands to break the deadlock over an award of to the oil company's Paradip crude oil refinery.

At a meeting with Chief Minister in New Delhi, emphasised on the need for finding a middle path, wherein both and the state government can work out a mutually acceptable solution by climbing down from their stated positions.

felt that though the state had extended the tax concession in 2004, there was a necessity of finding an amicable solution to the present impasse keeping in view the fiscal health of the state and commercial interest of The minister said it was important for the state government to incentivise the expansion plans of to create petrochemical and downstream industries in the state. "Over a period of time, it will enable the state to increase its revenue and also create additional employment avenues for the youth of the state. This will lay [the] foundation of a new industrial ecosystem, facilitating industrialization and fiscal consolidation", he added.

was hopeful of reaching a settlement with "We discussed ways to find a solution to the problem. We hope that we will come to an amicable solution with as far as the state government is concerned," told reporters.

During the meeting, officials of the Ministry of Petroleum & Natural Gas (PNG), government and agreed to deliberate various issues and work out an amicable solution at the earliest.

and the government are wrangling over the deferment of value-added tax (VAT) allowed to the oil major according to an agreement signed in 2004. The pact allowed deferment to IOCL's Paradeep oil refinery for 11 years from the start of commercial operations to ensure the project's commercial viability. The state government contended that the concession was given keeping in view the initially proposed capacity of nine million tonnes per annum (mtpa).

State government officials alleged that unilaterally went ahead to raise capacity to 15 mtpa without consulting the government. The state government felt with a rated capacity of 15 mtpa, the refinery was very much viable and hence, there was no need for deferment. More, as the state's finances were under strain and collection growth muted, the state government revoked the old notification that allowed the incentive, in February this year. Accordingly, the state government had issued a demand notice worth Rs 1,485 crore payable as by on February 27. Peeved with the decision, the oil marketing company (OMC) challenged the state government's abrupt move in the Orissa High Court. The court gave directives to both the sparring parties to get the row resolved through the working group headed by a secretary with the Ministry of PNG.

However, several rounds of talks proved to be of no avail as both the government and refused to budge from their pole positions.

First Published: Fri, August 18 2017. 19:40 IST