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HPCL suspends Bathinda refinery
To start work only if Punjab clears aid package
Manoj Kumar
Tribune News Service

New Delhi, August 19
Hindustan Petroleum Corporation Limited (HPCL) has announced the suspension of the Guru Gobind Singh Refinery project in Bathinda district till the clearance of the financial package by the state government, which includes sales tax exemption for 15 years.

In a written reply, Union Petroleum and Natural Gas Minister Mani Shankar Aiyar today informed the Lok Sabha that activities of the refinery project were under suspension since April 2003 due to delay in the clearance of the financial package by the state government.

The question in this regard was asked by Mr Sukhdev Singh Dhindsa (SAD) and Mr Avinash Rai Khanna (BJP) both MPs from Punjab. Mr Surinder Singla, Finance Minister, Punjab, had last week said the HPCL would implement this mega-project on the terms and conditions of the Punjab Government, without any sales tax exemptions.

Elaborating the reasons of suspension of the project, Mr Aiyar said, during 1998-2000, the Punjab Government had agreed to grant a financial package of incentives, including sales tax exemption. Consequently, the HPCL and the state government had agreed to formalise the incentive package through a memorandum of understanding.

“Accordingly, a Deed of Assurance (DOA) covering obligations of the Punjab Government and the HPCL to the project was proposed in September 2001. However, due to a delay in the receipt of DOA from the Punjab Government, major project activities have been under suspension since April 2003,” said the Petroleum Minister.

In fact, with the efforts of previous state government, the HPCL had agreed to set up the refinery at Phulo Khari village in Bathinda district with an estimated investment of Rs 9,806 crore (at June 1998 prices). For this purpose, a subsidiary of the corporation —Guru Gobind Singh Refineries Limited (GGSRL) — was set up to implement the project.

Officials in the Petroleum Ministry and HPCL claim that due to the adamant attitude of the present state government, the project may be ultimately terminated. They said, “with the expansion of the Panipat refinery and surplus capacity generated in the country, the HPCL does not find it attractive enough to invest in a far-flung high-risk border state unless the state government comes forward with a financial package.”

The state would be a major loser, they said, if the HPCL decided to cancel the project. It is likely to provide direct employment to around 1000 persons, besides creating a hub for the ancillary units.

Mr Aiyar admitted that an expenditure of Rs 288.1 crore had already been incurred on the project by July, 2004. Further, 1992 acres of land has been acquired for the refinery, and work relating to site grading, roads, canals, drains, area lighting and tank foundations had been completed.

Without visualising a change in the stand of the new state government, the HPCL has also acquired 310 acres of land at Mundra to set up a crude oil terminal and 185 acres for site development, besides procurement of steel plates for storage tankers.

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