The work on the refinery will commence in the current financial year and will complete in next four years, Union Oil Minister Dharmendra Pradhan told reporters here.
It will be the largest industrial investment in the state, the minister said further.
"It was a direct loss of Rs 40,000 crore to the state of Rajasthan in 15 years. In the previous MoU, the state had to give Rs 3,736 crore interest free loan every year for 15 years, which would have burdened the state finances," Pradhan told reporters after signing of the MoU.
The board of HPCL yesterday agreed on reduced fiscal incentives from the state government and approved resumption of work on the oil refinery.
HPCL, in March 2013, had signed an MoU with the Rajasthan government for setting up the refinery-cum- petrochemical complex in the Thar desert near the oil discoveries made by Cairn India.
The refinery however never took off as a change of guard in the state led to the Rajasthan government putting on hold the fiscal incentives for the project.
Elaborating further about the upcoming refinery project, Pradhan said that HPCL, that had to spend Rs 37,230 crore under the previous deal, will now spend Rs 43,129 crore.
"Oil field permission had to end in 2020 but we have provided permission to the refinery to run for 10 more years. Apart from 43,129 crore, additional Rs 27,000 crore investment will be made in the refinery, oil field and petro-chemical complex.
"Overall, Rs 70,000 crore worth investment will be made in next four years," Pradhan said.
According to the fresh MoU, the refinery will produce BS-VI emission norms compliant fuel. The government plans to move to BS-VI emission norms by 2020.
The HPCL board, in March 2013, had approved setting up of the complex at a cost of Rs 37,320 crore. Half of the crude oil requirement at the proposed refinery at Barmer was to come from the neighbouring oil fields of Cairn India. The rest was to be imported crude.
At that point, HPCL had asked the state government to extend fiscal benefits like the ones extended by Gujarat and Odisha to new refinery projects to make the Barmer unit viable.
The concessions included 50 per cent exemption in excise duty, waiver of VAT on products sold in Rajasthan and the state government picking a small stake in the project.
The state government also signed an MoU with Gas Authority of India Limited (Gail) for piped domestic gas line network in Kota.
Rajasthan State GasLimited (RSGL) signed the MoU with Gail authorities to supply domestic gas to households.
Chief Minister Vasundhara Raje said that the work will commence soon for providing clean energy which will improve quality life of the people.
Union Petroleum and Natural Gas Minister Dharmendra Pradhan said that every year 5 lakh women die due to non- availability of clean fuel.
He said that the BJP-led government has provided 43 lakh domestic LPG connections in almost three years in Rajasthan.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)