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HPCL resumes work on Rs 41K cr Rajasthan oil refinery

Press Trust of India  |  New Delhi 

State-owned Hindustan Petroleum Corp Ltd (HPCL) today decided to resume work on the Rs 41,000 crore refinery after its board agreed on reduced fiscal incentives from the state "Board at its meeting held today has approved resumption of refinery project and signing of revised MoU with the of for implementation of the project," the company said in a filing to the stock exchanges. It however gave no details. Minister Dharmendra Pradhan had earlier this month stated that fiscal incentives for the project have been revised and a memorandum of understanding (MoU) is likely to be signed in later this month. "The fiscal package negotiated by the previous (Congress) had put a big burden on Now, that has been balanced," he had said. The fiscal sops offered previously were in favour of the company but now they have been reworked in favour of the state, he said. The project, which has been in the works for nearly five years, is projected to cost Rs 41,000-42,000 crore, up from the previous estimate of Rs 37,320 crore. HPCL, in March 2013, had signed an MoU with the for setting up the refinery-cum-petrochemical complex in the Thar desert near the discoveries made by Cairn India. The refinery however never took off as a change of guard in the state led to the putting on hold the fiscal incentives for the project. While the size of the refinery remains the same, the unit will cost more because it now has to be built to produce Euro-VI grade petrol and diesel, officials said. Engineers India Ltd (EIL) is doing a feasibility study. The board, in March 2013, had approved setting up of the complex at a cost of Rs 37,320 crore. Half of the requirement at the proposed refinery at Barmer was to come from the neighbouring fields of Cairn India.

The rest was to be imported crude. At that point, had asked the state 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 and the state picking a small stake in the project. Originally, the state-owned and Natural Gas Corp (ONGC), which owns 30 per cent interest in the Barmer fields of Cairn India, in 2005 had committed to building the refinery, but later started soft-pedalling the project. In 2012, entered the fray and proposed to take 51 per cent stake in it. ONGC, which originally had the authorisation from the for processing the Barmer crude at the proposed refinery, willingly made way for Cairn India, which holds 70 per cent interest in the fields, produces about 1,60,000 barrels per day (8 million tonnes a year) from the fields. For HPCL, which has only two refineries in Mumbai and Visakhapatnam, the project will help meet fuel demand in the north.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, April 17 2017. 19:28 IST