Jaipur, April 17: Rajasthan government today signed a reworked Memorandum Of Understanding (MOU) worth Rs 43,129 crore with Hindustan Petroleum Corporation Limited (HPCL) for India’s first refinery and petrochemical complex in the border district of Barmer today.
The Barmer refinery would be the first one to start functioning directly following the BS-VI norms. The Barmer refinery at Pachpadra would be an eco-friendly one and hence would follow the BS-VI stage norms, thus reducing the pollution levels to a minimum. The project is slated to run for 30 years with an annual production of 9-million tonne crude oil. If the oil dries up before the slated time, the refinery would remain functional as oil would be imported and sent to process here.
The state government has brought down the Viability Gap Funding (VGF) considerably from Rs 3,736 crore to Rs 1,123 crore for 15 years while the state government’s return on investment has been increased from two to 12 percent.
Chief Minister Vasundhara Raje, after coming to power in 2013, had maintained that the MoU inked with HPCL by the previous Congress government for the refinery was a shoddy deal for the state government and that the stakes of the state should be increased. The state government had agreed to offer an interest-free loan from 2016-17 to 2030-31, to be repaid in annual installments from 2031-32.
Raje, who also holds the finance portfolio, took a hard stand on the refinery and had announced that the terms of the project will be renegotiated with HPCL.
Raje had said in one of her Budget speeches that “The previous government had committed to pay Rs 3,736 crore for 15 years as an interest free loan. This would have amounted to over Rs 56,000 crore. For such a lucrative project, the state government agreed to pay Rs 56,000 crore but kept the state’s share limited to only 26 per cent.”
The refinery which has been in the works for over four years now, will cost around Rs 43,000 crore, up from the previous estimate of Rs 37,320 crore.
HPCL, in March 2013, had signed an MoU with the Rajasthan government for setting up the refinery-cum-petrochemical complex in the Thar desert near the oil discoveries made by Cairn India. But the refinery never took off as a change of guard in the state led to Rajasthan government putting on hold the fiscal incentives for the project.
While the size of the refinery remains the same, the unit will cost more because it now has to be built to produce Euro-VI grade petrol and diesel,The project will cost more than the earlier estimate of Rs 37,000 crore.
The opposition Congress had slammed Raje for the inordinate delay in starting the project. They said : “The refinery project has not gone to the private sector or to any industrialist. It is a government of India project. HPCL would have invested Rs 40,000 crore into the project but the state government has deliberately put a spanner in the works out of political vendetta…This project does not benefit any private company but by not implementing it, the private sector is being benefited,”
Former Chief Minister Ashok Gehlot had said : “State governments long for such projects and we had fought with the Centre to get approval at the earliest. Now what is the reason behind stalling it? The state government has a stake in it. Whether you increase or decrease that stake, no one has objections, but to stall it just because it was approved by the previous government is not right.”
After a delay of almost four years, Raje today inked the new MOU with HPCL today, hurrying up now as next year is going to be an election year for her.