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This activity is as important as roads and rail lines: Chidambaram

CAPACITY EXPANSION: The Finance Minister, Mr P. Chidambaram (right), being greeted by the Indian Oil Chairman, Mr Sarthak Behuria, as the Petroleum Minister, Mr Murli Deora, looks on during the dedication ceremony of capacity expansion of Panipat Refinery in Haryana on Friday. — R.V. Moorthy

New Delhi , Jan. 12

Companies in pipeline projects may have something to look forward to in the forthcoming Budget. The Finance Minister, Mr P. Chidambaram, on Friday said that he would consider the Petroleum and Natural Gas Ministry's request of granting infrastructure status to pipeline projects in the country.

The Finance Minister said this while dedicating Indian Oil Corporation's Panipat Refinery Expansion Project to the nation.

Recognising the importance of petroleum pipelines, the Finance Minister, pointed out that this activity is as important as roads and rail lines. According to an official communiqué, the Finance Minister assured to look into the request of the Petroleum Ministry for according infrastructure status to the pipeline projects. Roads and railways have been granted infrastructure status, entitling tax holiday to the entities operating in these sectors.

Oil bonds

Mr Chidambaram also said that to compensate the oil retailing companies for the under recoveries suffered by them on domestic sale when international oil prices were skyrocketing, the Government has issued oil bonds worth Rs 14,000 crore. He indicated that the Government may issue more oil bonds.

Earlier, the Union Petroleum Minister, Mr Murli Deora, in his address had appealed to the Finance Minister to consider the request of oil industry to grant the infrastructure status to the gas pipelines so as to create conducive environment for rapid growth of piped natural gas supply to the major cities in India as well as supply of fuel to major industrial centres.

"We will also be forwarding our tax rationalisation proposals in our pre-budget consultations for the kind consideration of Finance Minister. I am very hopeful that the petroleum sector should be hearing good news from the Finance Minister in the months to come," he said.

With the softening of crude prices, IndianOil's under recoveries on sale of petroleum products — petrol, diesel, LPG and kerosene — is expected to come down to Rs 40-45 crore per day in the second fortnight of January from the present level of Rs 50 crore per day, a senior IndianOil official told Business Line. The Indian crude basket touched the lowest ever (April 2006 till date) on January 11 at $51.05 a barrel.

"With international crude prices easing, we expect under-recoveries on at least petrol to turn positive, while that on diesel will come down," Mr Sarthak Behuria, IndianOil Chairman, said at the function. However, LPG and kerosene remain to be an area of grave concern, he added.

IOC PANIPAT refinery

IndianOil announced the doubling of its Panipat refinery capacity to 12 million tonne at a cost of Rs 4,300 crore. With this, the refinery capacity of IndianOil Group companies will go up to 60.2 million tonne per annum, the largest share among refining companies in India, he said.

As regards IndianOil's plans on joint venture with Reliance Industries for retailing natural gas to households and automobiles, Mr Behuria said, "we are in talks for a 50:50 joint venture for city gas distribution project along the pipeline Reliance Industries is building from its KG-Basin field." Investments could be close to Rs 2,000 crore.

He also did not rule out the possibility of taking a foreign partner in its Rs 14,000 crore naphtha cracker complex at Panipat, which would make raw material for polyester. IndianOil will invest about Rs 8,000 crore in 2007-08, mostly on expanding the refining capacity at Haldia and Koyali in Gujarat and petrochemical project at Panipat.

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