Financial Daily from THE HINDU group of publications
Saturday, Jun 11, 2005

News
Features
Stocks
Port Info
Archives
Google

Group Sites

Corporate - New Projects


HPCL's Bhatinda refinery plan back on track

Pratim Ranjan Bose

Kolkata , June 10

AFTER almost a decade since it was planned, Hindustan Petroleum Corporation Ltd (HPCL) is set to finalise its plans on setting up the 9-million-tonne Guru Gobind Singh Oil Refinery at Bhatinda in Punjab.

The company's plans had hit a roadblock during the last two years ever since the present State Government reversed the decision taken by the previous regime on tax concessions.

Though it was agreed in February this year that the proposed refinery would be given incentives "in a mutually acceptable form", the project had been kept on hold as a Deed of Assurance (DoA) from the State Government was awaited.

According to sources, HPCL has now arrived at a consensus with the Punjab Government on the concessions. Though the details are not known, they said that with this development the final hurdle before the project was removed. The company is expected to enter into an agreement with the State Government on commissioning of the project "shortly".

Expected to be commissioned in four years, the project may undergo cost escalation from its initial 1998 estimate of about Rs 9,806 crore.

The first letter of intent for the Bhatinda refinery was issued in April 1996. The project was initially designed to involve strategic collaboration with international players. Accordingly, the foreign investment promotion board (FIPB) had also given the necessary approvals in 1996.

Despite showing initial interest, two international majors Saudi Aramco and Exxon finally questioned the viability of the proposed refinery and decided against participating in the project. The viability of the project was then questioned, leading to inordinate delay.

During all these years, HPCL devised different financing proposals requiring substantial equity participation by the financial institutions, the Punjab Government and the general public. However, none of these proposals materialised.

With the return of the Congress Party to power in Punjab, the project ran into rough weather. The new State Government declared that the tax concessions offered by the previous Akali Dal Government as unbearable for the State economy. In view of the fact that competing refiners were able to extract concessions from respective State Governments for setting up their projects in the hinterland, tax sops had come to play a major role in defining the viability of the Guru Gobind Singh Oil refinery.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page


Stories in this Section
World Park sets up hotel at Rameswaram


Tata group wants to invest heavily in Karnataka: Ratan
German Remedies launches new cancer drug
Ranbaxy acquires Spanish co's generic product portfolio
Jaypee plans 150-room hotel
RIL raises $350 m as multi-currency loan
Tata Steel gets $300-m IFC loan
Potential settlement of feud may not impact Reliance ratings: S&P
FCI bond issue oversubscribed
HPCL's Bhatinda refinery plan back on track
Knorr-Bremse opens facility in Pune
Euro plant starts production at Kutch
Yamaha India to invest Rs 200 cr over 3 yrs — `Several options' from global portfolio being considered for launch
Partha Dattagupta is Barista CEO


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line