The Hindu Business Line : Rajasthan refinery not viable: ONGC

ONGC on Tuesday said that the proposed Rs 8,000-crore Rajasthan refinery project was not economically viable unless the State Government extends large-scale fiscal incentives. Mr R.S. Sharma, Chairman and Managing Director, said that the company was working out ways and means in consultancy with its partners Cairn Energy Plc, to evacuate the crude from the fields.

"We are told that it will not be possible for the State Government to offer us the fiscal incentives," he said. Mr Sharma said an economic and financial viability study of a refinery at Barmer in Rajasthan, to process crude oil discovered by Cairn Energy in the State, has found the project totally unviable.

Incentives

Asked what are the kind of fiscal incentives the company was looking at, he said, ONGC has sought incentives similar to those extended by the other State Governments for other refineries. ONGC has sought sales tax exemption for 15 years for making the 7.5 million tonnes refinery viable.

Mr Sharma also said that the company would try to get its subsidiary, Mangalore Refinery and Petrochemicals Ltd (MRPL) de-nominated as the official nominee take the crude oil found by Cairn Energy in Rajasthan. He did not rule out the possibility of selling the crude to refiners such as Reliance or Essar Oil.

Incidentally, Cairn Energy Plc, the 70 per cent owner of the oil fields, had earlier this month said that it was looking at other options to evacuate the crude including building a pipeline to a refinery. Mr Sharma said ONGC-Cairn, the 30:70 owner of the fields, could build a crude oil transportation pipeline from Barmer.

Asked whether the pipeline cost would be part of the field development cost, he said, while building in the pipeline cost in oil field development plan (FDP) will help the operators recover the cost from sale of crude oil, ONGC-Cairn would levy a transportation tariff if the pipeline was to be built through a special purpose vehicle (SPV). Levy of transportation tariff would mean lowering the sale price of crude, thereby, lower realisation to the Government. "Either way, the Government will not stand to loose anything," he said.

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