HPCL calls for emergency board meet to clear Barmer's new fiscal package

Project is expected to bring in an investment of Rs 70,000-80,000 crore in Barmer, says experts

The much-awaited Rs 42,000-crore Barmer refinery in Rajasthan by state-run Hindustan Petroleum Corporation Ltd (HPCL) may get a fresh lease, as the ministry of petroleum and natural gas may sign a fresh memorandum of understanding with the Rajasthan government this week with revised fiscal package for the project.

HPCL has called for an emergency board meeting to clear the revised terms and conditions of the project on Monday.  On Tuesday, petroleum minister Dharmendra Pradhan and Rajasthan chief minister Chief Minister Vasundhara Raje will sign a fresh MoU on this in Jaipur. “The fiscal package negotiated by the previous (Congress) government had put a big burden on Rajasthan. Now, that has been balanced and work will soon start on the project,” said a senior official close to the development.

The cost of the 9 million tonne refinery project, which was earlier pegged at Rs 37,320 crore is likely to cross Rs 42,000 crore now. As per the earlier MoU, the state government wanted to take up 26 per cent stake in the project. In addition, it has also extended a support of $1 per barrel on the purchase of crude oil by the refinery and give discounts to oil marketing companies on refinery gate price. About 50 per cent of the crude for the refinery was expected to come from Barmer only, while rest HPCL was planning to import. The state government had also agreed to offer interest-free loan from 2016-17 to 2030-31, which can be repaid in annual instalments from 2031-32.

The idea of a refinery in Barmer was first mooted by former ONGC chairman Subir Raha after Cairn Energy struck oil in Mangala field way back in 2004. Later in 2012, HPCL decided to take up the project. The plant would be based on 50 per cent of crude from Barmer basin, while the remaining would be imported. Rajasthan government had recently decided to shift the site of the plant to Pachpadra — 40 km away from the initially planned location at Leelala village — both in Barmer district.

According to industry experts, the project is expected to bring in an overall investment of Rs 70,000-80,000 crore in the entire area.