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Bathinda refinery back on track
Ajay Banerjee
Tribune News Service

Chandigarh, June 25
To retain and revive the Bathinda oil refinery project the Punjab Government today agreed to pass on an interest-free loan of Rs 1,250 crore to Hindustan Petroleum Corporation Limited (HPCL).

A memorandum of understanding (MoU) to this effect was signed between the Punjab Government and senior HPCL functionaries here today.

Despite passing on the huge sum as interest-free loan, the Punjab Government will still save about Rs 4,000 crore when the new agreement is compared with the previous agreement between the state and the HPCL, which is building the refinery. Now HPCL can scout for a foreign partner to raise the initial capital to set up the refinery. “Finding partners will be the job of the HPCL,” said a senior functionary of the state government while confirming the crucial development here tonight.

Under today’s agreement Punjab will pay HPCL Rs 250 crore each year for the first five years. From the sixth year onwards the HPCL will repay the Rs 250 crore each year without interest in the next five years. With this the actual financial liability of the Punjab Government will be just Rs 500 crore which is by way of the loss of interest on this amount.

As per the previous agreement the Punjab Government was to exempt sales tax payment to the tune of Rs 600 crore annually for the first 15 years. The HPCL would have started paying back from the sixteenth year onwards till the 30th year of operations in interest-free instalments. This alone would have meant a loss of more than Rs 4,000 crore in revenue by way of exemption of taxes and interest.

About an year ago Punjab had not accepted to tide over this huge loss of about Rs 4,000 crore and had asked for a fresh agreement with the HPCL. The Punjab Government has already invested Rs 300 crore by way of land acquisitions in the area.

The HPCL had threatened to move their unit to either Madhya Pradesh or Rajasthan if the deal did not materialise . Also with the trade gearing up with Pakistan, which is demanding diesel from India, Bathinda was the ideal place for transporting the oil further. The HPCL may choose to lay a fresh pipeline to transport the crude from any port city to Bathinda. A line between Kandla (Gujrat) and Bathinda exists but it may not be used for the purpose.