The Telegraph
Monday , February 11 , 2013
Since 1st March, 1999
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Refinery sop hope in budget

New Delhi, Feb. 10: The budget for 2013-14 is likely to offer a tax holiday to refineries set up during the Twelfth Five-Year Plan (2012-17) to boost infrastructure development and help the country to emerge as a global refining hub.

India’s refining capacity is likely to go up to around 310 million metric tonnes per annum (mmtpa) from 190 mmtpa by the end of March 2017.

A seven-year tax holiday was available to units that are commissioned by March 31, 2012, under sub-section 9 of Section 80-IB of the income tax act.

Officials said the holiday could be extended as several refinery expansion and greenfield projects missed their deadlines because of the global economic slowdown. The sop is likely to help the country to emerge as a major refining centre.

Many companies, which had announced plans to set up refineries to take advantage of the tax holiday, had sought an extension of the benefits till the end of the Twelfth Five-Year Plan from the petroleum ministry.

The oil ministry, which took up the issue in its budget discussions with the finance ministry, is optimistic.

The ministry pointed out that tax concessions had made the setting up of grassroots refineries and expansion of units viable. So, the restoration of the sops will have economic and social benefits.

During the plan period, 30 mmpta grassroots refineries are likely to be commissioned. Indian Oil Corporation’s 15-mmpta Paradip refinery in Odisha is slated to be commissioned in September, while Nagarjuna Oil Corporation plans to commission a 6 mmpta refinery in Cuddalore. Hindustan Petroleum Corporation Ltd plans to set up a 9-mmtpa refinery in Ratnagiri. Some more refineries are on the cards.

Downstream firms also have plans to expand capacity by 50.6 mmpta during the plan period.

The Petroleum Planning and Analysis Cell (PPAC) — the research unit of the oil ministry — has in a study said India had certain relative advantages over other countries to become a global refinery hub.

The International Energy Agency (IEA) has projected that capacity addition will be concentrated in developing countries because of the difficulties in the setting up of refineries or capacity addition in the OECD (Organisation of Economic Co-operation and Development) countries.

The OECD is a club of 34 mostly developed nations.

In North America, there will be a small increase in capacity to 22.1 million barrels per day by 2010 and 25.6 million barrels per day by 2030.