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| PM asks OilMin, ONGC to re-examine Barmer refinery proposal |
| Press Trust of India / Barmer Aug 29, 2009, 15:29 IST |
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Prime Minister Manmohan Singh has asked Petroleum Ministry and ONGC to re-examine possibility of setting up a refinery at Barmer district in Rajasthan to process the crude discovered by Cairn India in the state.
Rajasthan Chief Minister Ashok Gehlot, who had last raised the demand for setting up a refinery in the Thar desert in the presence of UPA chairperson Sonia Gandhi in February, today again raised the demand when PM came here to inaugurate the oil find from the Cairn field.
"The Prime Minister has instructed the case to be re-examined, so we will give it a serious thought and will come back to you," Petroleum Minister Murli Deora said at the function.
Gehlot said that it was the aspiration of the people of Rajasthan that a refinery is set up here and the pipeline built to transport Cairn India crude to Gujarat coast used for additional importing oil to be processed at the unit.
ONGC Chairman R S Sharma, however, said the viability of the refinery depends on fiscal incentives like exemption from sales tax, free land water and power and other sops from the state government.
ONGC had examine the viability of 7.5 million tonnes a year refinery but found the rate of return on capital at just 1.5 per cent without the fiscal incentives.
"The refinery will be done by non PSU entity possibly a special purpose vehicle unless the project is economically viable, he will not get any debt or equipment supplier," Sharma said, adding that ONGC was looking at the 12 per cent rate of return on the refinery investment.
ONGC had few years back, made a proposal to set up a well head refinery at the site of 1,75,000 barrels per day oil fields in the Barmer district and had sought the allocation of the entire crude for the project.
But with the exit of Subir Raha who had conceptualise the project, ONGC had the second thought and commissioned the re-feasibility and market studies for the project that found the refinery inviable without state government sops.
ONGC will not set up the project unless it was economically viable. "The ball is in the Court of the state government," he said, adding the company was having discussion with the state government on the issue.
While Sharma stated that ONGC and Cairn India had jointly brought allocation of crude for the refinery project, Cairn India CEO Rahul Dhir said the company could add more value through exploration and production rather than a downstream refinery project.
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