Centre, Orissa Joint Move To Revive IOCs Paradip Project

Bhubaneswar, Nov 3: | Updated: Nov 4 2003, 05:30am hrs
The Centre and the Orissa government are inching towards reviving the jinxed Eastern India Oil Refinery project of Indian Oil Corp (IOC) at Paradip.

The top-level officials of the ministry of petroleum & natural gas, IOC and the state government are meeting shortly to discuss contentious issues and finalise a time-bound programme for the implementation of the project.

The Centre and the state government are working out a formula to restore the sales tax concession to the project. The ministry of finance, meanwhile, has listed it as a pipeline project, taking it out from the purview of the Empower Committee of the state finance ministers which has decided not to provide sales tax concession to the new projects.

The ministry of finance has clarified that it has no objections if the sales tax concession was restored for the project was cleared before the decision of the Empower Committee, the state industry minister, Mr KV Singhdeo, told FE. Following the clarification from the ministry of finance, the state government is preparing itself for the restoration of the original tax exemption. A high-level official team headed by the state chief secretary, Mr PK Mohanty, is now looking into the matter. In a letter to the Union petroleum minister, Mr Ram Naik, chief minister Naveen Patnaik has reportedly intimated that the state government has an open mind regarding the issue of sales tax concession.

Even though the foundation stone for nine million tonne refinery project with an investment of Rs 8270 crore was laid by the Prime Minister, Mr Atal Bihari Vajpayee, in May 2003, the project could not take off because of the withdrawal of sales tax exemption by the state government. The project was enjoying sales tax exemption for 11 years, besides several other incentives from the state government. An arrangement of swapping of bonds in lieu of the sales tax to the tune of Rs 4838 crore also failed to revive the project.

The project, however, started looking up when in July, the prime minister suggested that the state government and the Centre should co-operate with each other to make the project viable. Following the PMs directives, the Project Evaluation Committee of the board of directors of IOC, in its meeting on August 18, 2003, has recommended implementation of the project.

The IOC and the ministry of petroleum & natural gas, however, have requested the state government for restoration of the sales tax incentives as the viability of the project is critically dependent on the sales tax incentives. They have also suggested for signing of an MoU between the state government and the IOC for the implementation of the project.