Bhubaneswar, Oct. 7: Indian Oil Corporation’s proposed Paradip refinery will be completed by 2007, the Parliamentary committee on petroleum has assured the state government.
The Rs 12,400-crore refinery project at Abhaychandrapur village of Paradip in Jagatsinghpur district was scheduled to be commissioned in August 2003. Prime Minister Atal Bihari Vajpayee had laid the foundation stone of the project way back on May 24, 2000. However, work at the zero-waste refinery project was delayed following a stand-off between the state government and IOC over a tax holiday.
The committee, head by MP Prabhunath Singh, recently met chief minister Naveen Patnaik and assured him that the project was on course, only its implementation has been delayed due to several factors like the fall in the demand of petroleum products, fewer incentives offered by the Orissa government and a substantial increase in the project cost. Initially pegged at Rs 8,312-crore, the project suffered huge cost over-runs and is now at Rs 12,400 crore according to a report by ICICI. The latter was appointed by IOC to provide a revised cost estimate.
IOC, in its reply to the Parliamentary committee on petroleum said: “Implementation methodology and schedule of the project are being reviewed, including implementation of a part of the Paradip refinery project, viz. the single point mooring and crude oil storage facilities along with the Paradip-Haldia crude oil pipeline, for supply of crude oil to Barauni and Haldia refineries of IOC to productively utilise assets created in the intervening period till the Paradip refinery goes into operation.”
Other reasons cited by IOC are the fall in demand of petroleum products. In the Ninth Plan document, the all-India demand was projected at 155 million metric tonnes in 2006-07. Further, in the Hydrocarbon Vision 2025 report, the all-India demand of petroleum products in 2006-07 was projected at 148 million metric tonnes. The same has been reassessed at 124 million metric tonnes due to fall in growth rate.
IOC sources said growth in demand of petroleum products was a negative 1.5 per cent in 2001-02. Though there has been a marginal improvement in the first four months of the current fiscal, it remains less than the Tenth Plan projection.
In the meantime, the state government has acquired 2,891.8 acres of private land and handed over it to IOC along with 456.34 acres of government land. IOC has already invested Rs 556.21 crore in the project and has so far committed an expenditure of Rs 1,049.73 crore.
The state government in July 2001 announced several sops for the project after IOC threatened to relocate the refinery following a protracted stand-off over incentives. Trouble began in 2000 after the government withdrew sales tax incentives, arguing that otherwise Orissa would become ineligible for Central aid.
However, chairman M. A. Pathan threatened to relocate the project if the government did not honour its offers of a tax incentive. IOC even halted work in December 2000, which was partly responsible for the huge cost over-runs.