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Threat to shift Bathinda refinery
Manoj Kumar
Tribune News Service

New Delhi, October 14
Hindustan Petroleum Corporation Ltd (HPCL) today threatened to shift the Bathinda refinery to Rajasthan if the Punjab Government failed to fulfil its promise of extending sales tax exemptions and other concessions.

HPCL Chairman M P Lal disclosed here today that the company was still hopeful that the state government would keep its promise of offering fiscal incentives. Otherwise, the corporation would be forced to review the project.

‘‘We are reviewing the Punjab refinery proposal and if the state government does not give us the fiscal incentives, including sales tax exemption, we may look at putting up the refinery in neighbouring states like Rajasthan,’’ he said.

The border areas of Punjab and the cotton belt of Bathinda-Muktsar region were expected to get a major industrial boost had the project been implemented.

Though former Prime Minister Atal Bihari Vajpayee had laid the foundation of this mega project with much fanfare in November 1998, the project has been mired in one or the other controversy.

When contacted, Punjab Finance Minister Surinder Singla said: ‘‘We want the refinery, but would not like to give any sales tax exemptions.

It would be tantamount to a loss of over Rs 15,000 crore to the state government in the next 15 years, as we will have to forego sales tax worth Rs 1000 crore to Rs 1500 crore annually on petroleum products.’’

The experts in the petroleum sector have, however, claimed that with the implementation of VAT by next year, the state will not be able to maintain the projected sales collection on petroleum products.

Further, Finance Minister P. Chidambaram has already announced that he would not allow the public sector companies to ‘‘force the state government to offer them sales tax or other exemptions.’’

Mr Singla said: ‘‘I am meeting the Finance Minister on October 18 in this regard, and hope that the HPCL will not shift this prestigious project.’’

The officials in the Petroleum Ministry and HPCL said in view of the stubborn attitude of the state government and the fact that in Rajasthan, major crude oil reserves have been found, the HPCL would take a decision after working out the economics of various options.

A senior official of the HPCL said,‘‘since HPCL does not have any refinery in the northern region, we are quite serious to set up the refinery, but we cannot ignore the financial implications.’’

He lamented that the Bathinda refinery project had been dragging for the past many years despite the fact that the corporation had already invested over Rs 300 crore in the project estimated to cost over Rs 10,000 crore.

It is pertinent to note that Union Petroleum Minister Mani Shankar Aiyar had also informed the Lok Sabha during the Budget session that project activities of the Bathinda refinery project had been under suspension since April 2003 due to delay in clearance of the financial package by the state government.

Frustrated over the deadlock, the HPCL has now decided to invest Rs 2,000 crore in the Indian Oil Corporation's (IOC) Panipat refinery for buying a capacity of three million tonnes to meet its requirements in the northern region.

IOC is expanding the Panipat refinery from six million tonnes to 12 million tonnes with an investment of around Rs 4,000 crore.

HPCL is keen to buy half of the additional capacity to ensure uninterrupted supply of petroleum products for its northern market, said Mr Lal.

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