With the dispute between the Odisha government and Indian Oil Corp (IOC) over the value-added tax (VAT) being resolved, the oil marketing firm has firmed up plans to increase its investment in the state including expansion of the refining capacity in Paradip by 3-4 million tonne (MT) per annum. “Very soon we may be evaluating refinery expansion in Paradip. It is a greenfield 15 MT plant and we intend to expand by 3-4 MT,” said Sanjiv Singh, chairman of IOC, adding that the company has massive plans for further investment in the state.
IOC is investing Rs 50,000 crore in Odisha. This includes the Rs 5,000 crore Dhamra LNG terminal in which IOC will have 40% equity, though it has not yet been firmed up. Others in the project include GAIL (India) and Adani Enterprises. “We are building a polypropylene plant for which an investment approval of Rs 4,000 crore is likely shortly. Apart from some other smaller investments, BS VI project will require Rs 4,500 crore and we are looking at other petrochemical options which will be more than `8,000 crore. All these are linked with the refinery,” said Singh. The state government has already accorded Paradip the petroleum, chemicals and petrochemicals industrial region (PCPIR) status.
Last week, IOC paid Rs 2,935 crore to the Odisha government as part of the settlement to let go some of the tax incentives agreed upon in 2004. The tax amount was paid for the period of November 2015 (when the pant was commissioned) to July 2017. In return, the state government has agreed to provide Rs 700 crore interest-free loan per annum for 15 years to the oil company to compensate for the loss of withdrawing tax incentive for 11-year deferment on payment of tax on products made at the Paradip refinery and sold within the state. Though the company had sought Rs 1,000 crore interest-free loan per annum, Singh said the current negotiated arrangement is comparable with what recent projects have been offered.
The company expects that with a number of facilities, including a plastic park which is already under development, being set up in Paradip, various petrochemical downstream industries should come up in the region. “We will be making MEG (monoethylene glycol) in Paradip while PTA (purified terephthalic acid) is being made by Haldia Petrochemical and Mitshubishi plant, and these two are the raw materials for synthetic yarn and the textile industry. So these provide tremendous synergy to go for such expansions in the eastern part of the country,” Singh said.