 "IOC offers Odisha interest-free bonds for Paradip refinery")
Indian Oil Corporation (IndianOil) has offered the Odisha government interest-free unsecured bonds to make the Rs 34,000-crore Paradip refinery viable, after the state withdrew fiscal incentives for the plant.
The Odisha government recently told IndianOil it would lose Rs 22,745-crore revenue at present value if it allowed the company to defer paying value-added tax on the refinery’s produce sold in the state for the first 11 years. This amount, it said, was expected to be Rs 9,783 crore in 2004.
IndianOil has disputed the revenue-loss figure, which it claims will be Rs 8,000-9,000 crore. “If such a waiver is not possible, the state should consider giving IndianOil a grant-in-aid or accept interest-free unsecured bonds of IndianOil or an alternative entity payable at par without interest after 99 years of their issue in full settlement of taxes, duties and charges,” the company said in a communication on January 17.
Sanjiv Singh, director (refineries), IndianOil, told Business Standard a working group constituted by the ministry of petroleum and natural gas with representatives from IndianOil and the Odisha government were looking into the matter. Sanjeev Chopra, principal secretary in the Odisha industries department, refused to comment.
According to the Odisha government, the profitability of the refinery increased because of low crude oil prices and a higher capacity configuration than planned.
The refinery was initially planned for 9 million tonnes and this was later increased to 15 million tonnes. Prime Minister
Narendra Modi dedicated the refinery to the nation last February and it is now operating at 90 per cent capacity. According to sources close to the development, the withdrawal of benefits will have an impact on Rs 50,000 crore of other planned investments in Odisha.
These include a Rs 3,150-crore polypropylene plant, a Rs 4,000-crore mono-ethyl glycol unit and subsequent pipelines and terminals.
The Odisha government recently told IndianOil it would lose Rs 22,745-crore revenue at present value if it allowed the company to defer paying value-added tax on the refinery’s produce sold in the state for the first 11 years. This amount, it said, was expected to be Rs 9,783 crore in 2004.
IndianOil has disputed the revenue-loss figure, which it claims will be Rs 8,000-9,000 crore. “If such a waiver is not possible, the state should consider giving IndianOil a grant-in-aid or accept interest-free unsecured bonds of IndianOil or an alternative entity payable at par without interest after 99 years of their issue in full settlement of taxes, duties and charges,” the company said in a communication on January 17.
Sanjiv Singh, director (refineries), IndianOil, told Business Standard a working group constituted by the ministry of petroleum and natural gas with representatives from IndianOil and the Odisha government were looking into the matter. Sanjeev Chopra, principal secretary in the Odisha industries department, refused to comment.
According to the Odisha government, the profitability of the refinery increased because of low crude oil prices and a higher capacity configuration than planned.
The refinery was initially planned for 9 million tonnes and this was later increased to 15 million tonnes. Prime Minister
Narendra Modi dedicated the refinery to the nation last February and it is now operating at 90 per cent capacity. According to sources close to the development, the withdrawal of benefits will have an impact on Rs 50,000 crore of other planned investments in Odisha.
These include a Rs 3,150-crore polypropylene plant, a Rs 4,000-crore mono-ethyl glycol unit and subsequent pipelines and terminals.
One subscription. Two world-class reads.
Already subscribed? Log in
Subscribe to read the full story →*Subscribe to Business Standard digital and get complimentary access to The New York Times
Smart Quarterly
₹900
3 Months
₹300/Month
SAVE 25%
Smart Essential
₹2,700
1 Year
₹225/Month
SAVE 46%
*Complimentary New York Times access for the 2nd year will be given after 12 months
Super Saver
₹3,900
2 Years
₹162/Month
Subscribe
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Exclusive premium stories online
Over 30 premium stories daily, handpicked by our editors
Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share
Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor
Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements
Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app
SAVE 25%