R’sthan to restart talks with ONGC for refinery project

JAIPUR: The Rajasthan government wants to resume talks with Oil & Natural Gas Corporation (ONGC) for setting up a 7.5 mmtpa wellhead refinery at Barmer with an estimated investment of Rs 10,000 crore.

Department of mines principal secretary Ashok Singhavi told ET that the state government has sent a letter to ONGC for the resumption of talks. “We have hired an oil consultation firm — TrIdea — headed by former ONGC chairman Subir Raha for negotiations with ONGC. The state government would shell out Rs 10 lakh as consultancy fee besides travel expenses, which is 10% of the total fees, till the MoU is signed,” he said.

The state government had formed a three-member panel comprising the principal secretary finance, industry secretary and principal secretary mines for the selection of the consultancy firm. “Apart from TrIdea, we had received bids from around 10 firms including R S Prabhu, Sagar & Associates, Titlus, Paras Kuhad & Associates with fees ranging from Rs 25 lakh to Rs 1 crore. Raha’s rich experience with the oil major was also considered. The former ONGC chief knows every bit of the project, as the refinery was initially approved in his tenure,” Mr Singhavi said.

ONGC has put on hold its plan, stating that it cannot take up the project unless the state government provides land free of cost for the project, exemption from entry tax and sales tax/VAT deferment for 16 years. Other concessions include CST exemption and right of way for rail link. The state government found the demands unrealistic. “The refinery is worth Rs 12,000 crore while the concessions sought were worth Rs 21,000 crore,” Rajasthan mines minister L N Dave said.

The state oil major has asked for development of raw water and auxiliary facilities for uninterrupted supply of water at the refinery site. It has also sought duty-free electricity on purchase or self generated electric power at any time in future.

“The relief being sought is in excess of what has been agreed to for setting of a refinery in other states like Punjab, MP and Orissa, which don’t offer the advantage of crude production.

For the BPCL Bina Refinery, Madhya Pradesh government is offering a 15-year tax holiday of Rs 250 crore per annum. It is payable after 15 years and is interest free. CST is exempted, as entry tax on crude/material is not chargeable.”

For the HPCL Bhatinda Refinery, the Punjab government is offering Rs 250-crore interest-free loan for five years, payable in 10 installments (six monthly) and after the sixth year. The government, apart from offering CST and entry tax deferment for 15 years and 10 years, respectively, has exempted electricity duty for 15 years. Punjab government would also bear 50% of the cost of infrastructure development like roads, schools etc., which comes to around Rs 180 crore.”ONGC’s demands are lofty as compared to concessions given to refineries in these states,” Mr Singhavi said.