Govt May Announce Fisc Sops For Building Refinery Projects

New Delhi, January 27: | Updated: Jan 28 2003, 05:30am hrs
The government is planning to announce major fiscal concessions for setting up of new refinery projects in the country. Shortly after its decision to privatise Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL), the government is now actively contemplating to provide full customs duty exemption on imports of capital goods for new refinery projects. The obvious beneficiaries of this move will be the Bina and Bhatinda refinery projects of BPCL and HPCL.

Sources said, Indian Oil Corporation (IOC), which has revived its plans to put up a six-million-tonne grasroot refinery at Paradeep, will also benefit from such a move.

Top government officials said, An announcement to this effect is expected to be made by finance minister Jaswant Singh in the forthcoming budget.

Detailed discussions on this issue are expected to take place between petroleum minister Ram Naik and finance minister Jaswant Singh very soon, petroleum ministry sources said.

While refineries are no longer attractive investment propositions given the negligible and sometime negative returns. However, as the government has announced its commitment to complete Bina and Bhatinda refinery projects, such fiscal concessions are a must for speedy implementation of these highly-cost-intensive projects.

Senior petroleum ministry official said a note on extending these concessions for both the new refineries as also expansion and upgradation of existing refineries had already been forwarded by the nodal ministry to the finance ministry.

Although it is still to be be decided whether the new management of HPCL will be asked to take on the commitment of completing the project or the oil PSUs like ONGC or IOC will be asked to complete this task, disinvestment minister Arun Shourie said after the Cabinet Committee on Disinvestment meet on Sunday.

When contacted by FE, top officials of both ONGC and IOC refused to take on any commitment in the event of being left out of the race of companies planning to bid for HPCL.

If PSUs were allowed by the government to bid for HPCL, the price realisation would have been much better along with a commitment to complete the two refinery projects. Why should the disinvestment ministry now look towards the PSUs for completing the Bina and Bhatinda projects, a senior IOC official said.

Sufficient progress has already been made by HPCL in its Bhatinda refinery project. Engineers India Limited (EIL) has been appointed as the engineering and project management consultant for single point mooring (SPM) (point on the high sea where VLCCs come and download the product and crude).

EIL is also the consultant for building a pipeline between SPM and crude oil terminal besides building of crude storage storage tanks at the refinery sites. Around Rs 125 crore has been spent by HPCL during this fiscal andanother Rs 300 crore has been planned for next year.