IOCL to commission Paradeep refinery soon

The company had signed an MoU with state govt in Feb 2004 to set up 15 mn tonne refinery along with a petrochemical complex at Paradeep

Oil major Indian Oil Corporation Ltd (IOCL) said it hopes to commission the 15 million tonne crude oil refinery at Paradeep soon.

"The Paradeep refinery is an important project for us and we are going to commission it shortly. Regarding the issue of VAT (value added tax), it would be applicable on sale of products within Odisha. Concession on VAT is only a deferment and we will pay it back to the state government after a certain period," said IOCL chairman B Ashok.

IOCL had signed a memorandum of understanding (MoU) with the state government in February 2004 to set up a 15 million tonne refinery along with a petrochemical complex at Paradeep envisaging a total investment of Rs 55,000 crore.

The IOCL refinery will produce 5.97 million tonne of diesel, 3.4 million tonne of petrol, 1.45 million tonne of kerosene/ATF (Aviation Turbine Fuel), 536,000 tonne of LPG, 124,000 tonne of naphtha and 335,000 tonne of sulphur, all of which will be for sale in the domestic market.

The refinery and the petrochemical complex will be a part of the projects in the PCPIR hub that is expected to attract investments to the tune of Rs 2.74 lakh crore. IOCL is the anchor tenant for the PCPIR hub.

The state government has granted exemption on VAT to the oil major for 11 years from the date of commissioning of the refinery.

Though the revenue in the form of VAT would be ploughed back to the state exchequer after 11 years, the government will be denied cash flow to the tune of Rs 50,000 crore for the period.

The state government had allowed concession to IOCL to ensure competitiveness and viability for its refinery operations. Also, the refinery project had promised employment generation and promotion of downstream units.