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HPCL flip-flop

Chandigarh, Aug. 1: After braving criticism for bartering away the Punjab State Industrial Development Corporation’s shares in the profit-making Punjab Tractors Limited to a UK-based company for a song, Punjab chief minister Amarinder Singh has now withheld the signing of a deed of assurance with the Hindustan Petroleum Company Ltd (HPCL) for the Bathinda refinery and has sought a new MoU.

Amarinder had earlier called for scrapping of the Rs 16,000 project. But allegations that the chief minister wanted a private firm to build the refinery later forced him to announce that the state would lose nearly Rs 600 crore by way of sales tax revenue it generated from oil coming from other states once the Bathinda refinery started functioning. He now wants the project to be handed over to the Oil and Natural Gas Corporation “to save it” from uncertainty after HPCL’s disinvestment.

The flip-flop has caused much delay in the project’s implementation. HPCL, which has invested nearly Rs 300 crore in it, had recently written to the government to sign an assurance deed to facilitate the oil giant to procure bank loans for the project. But the government has expressed reservations about a clause in the MoU granting sales tax exemption to HPCL for 15 years.

“We cannot take petroleum minister Ram Naik’s words on face value. He has said that the refinery would be completed despite disinvestments in HPCL but we still want a fresh MoU with regard to various concessions granted to the project under the MoU between the government and HPCL,” a senior government official said.

The previous Shiromani Akali Dal-BJP government had signed a MoU with HPCL in November 2001, listing various concessions to the refinery. They included, apart from sales tax concession, exemption of electricity duty and sharing of 50 per cent cost of construction of roads linking the highways. It had also stated that the state industrial corporation would contribute an equity and act as facilitator. The Amarinder government does not want the industrial corporation to play any role in the refinery.

According to HPCL officials here, Amarinder’s rigid stance on amending the MoU would make it unfeasible for the company to go ahead with the refinery.

“In the first phase we would be producing six million tonnes of oil annually. The chief minister is only delaying the refinery and adding to the costs. Even if the ONGC is handed the project, it will ask for the same guarantees from the state government as we have. No company, private or belonging to the state, will pump in Rs 16,000 crore for nothing. The chief minister should look at long-term interests,” a senior HPCL official said.

The state government has asked the Centre to make good its loss of Rs 600 crore annually if it wants the refinery to be built at Bathinda.

Former chief minister and Shiromani Akali Dal leader Parkash Singh Badal has criticised Amarinder for suggesting that the refinery be handed over to the ONGC. “Amarinder’s statements make no fiscal sense. He has embarked on a route to barter away the state’s interests and he has to be stopped,” Badal said.

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