State-owned Hindustan Petroleum Corp Ltd (HPCL) today decided to resume work on the Rs 41,000 crore Rajasthan oil refinery after its board agreed on reduced fiscal incentives from the state government.
"HPCL Board at its meeting held today has approved resumption of Rajasthan refinery project and signing of revised MoU with the Government of Rajasthan for implementation of the project," the company said in a filing to the stock exchanges.
It however gave no details.
Oil 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 Jaipur later this month.
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.
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 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.
Originally, the state-owned Oil and Natural Gas Corp (ONGC), which owns 30 per cent interest in the Barmer oil fields of Cairn India, in 2005 had committed to building the refinery, but later started soft-pedalling the project. In 2012, HPCL entered the fray and proposed to take 51 per cent stake in it.
Cairn India, which holds 70 per cent interest in the fields, produces about 1,60,000 barrels per day oil (8 million tonnes a year) from the Rajasthan fields.
For HPCL, which has only two refineries in Mumbai and Visakhapatnam, the project will help meet fuel demand in the north.