IOC's Paradip oil refinery project faces uncertainty

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SummaryUncertainty continues to loom large over the Rs 46,000- crore Paradip oil refinery project of the Indian Oil Corp.

Uncertainty continues to loom large over the Rs 46,000- crore Paradip oil refinery project of the Indian Oil Corp (IOC). The project, which has already been delayed by about seven years, is facing another hurdle: its viability is being questioned now that the Centre has decided to withdraw the tax holiday for it from April 1, 2009.

IOC chairman Sarthak Behuria has reportedly urged the Orissa chief minister to get the fiscal incentive restored through Prime Minister Manmohan Singh. According to him, the withdrawal of the tax holiday will affect the viability of the project.

The seven-year tax holiday extended to Paradip Refinery will expire on April 1, 2009.

In 2001, the then prime minister, Atal Bihari Vajpayee, laid the foundation stone for the project.

Using the plea of the decision taken by the empowered committee of the state finance minister, the state government expressed its inability to give the tax concession offered according to the Orissa Industrial Policy Resolutions. The project then faced time and cost over-run problems. The project cost has shot up to Rs 46,000 crore, from the Rs 15,000 crore that was originally estimated.

The uncertainty of the Paradip refinery project will affect the setting up of the Petrochemical and Petroleum Investment Region (PCPIR) as the refinery is its anchor project. IOC, meanwhile, has invested Rs 1254 crore for laying a pipeline from Paradip to Haldia. The project may be commissioned anytime from now.

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