HPCL sources said the company was continuing its negotiation for roping in strategic partners in its upcoming projects such as Vizag Refinery expansion and GGSR.
Pratim Ranjan Bose
Kolkata, July 8
HAVING received the deed of assurance from the Punjab Government, HPCL is now gearing up for financial closure of the Guru Gobind Singh Oil Refinery (GGSR) at Phulokhari district in Bhatinda district, in this fiscal.
The proposed nine-million-tonne refinery will undergo substantial cost escalation from Rs 9,806 crore in 1998 both due to time over run and change in project configuration. As per the latest proposal the greenfield fuel refinery will produce Euro-IV fuel.
Now pending the formal approval from the board of directors, HPCL has already appointed Engineers India Ltd (EIL) for preparing a fresh detailed feasibility report. Discussions have begun to finalise the project configuration and the product details. The stress is on creating secondary and sweetening facilities for greater viability.
Though holding high hopes of roping in a strategic partner, HPCL has decided not to wait for the same and start commissioning at the earliest. The details on project financing are likely to be finalised in the next two to three months.
Stating that global players in oil refining sector are taking increasing interest in Indian economy, HPCL sources told Business Line that the company was continuing its negotiation for roping in strategic partners in its upcoming projects such as Vizag Refinery expansion and GGSR.
HPCL had received a deed of assurance (DoA) from the Punjab Government in the last week of June. The assurances included an interest free loan of Rs 250 crore per year for five years and non-fiscal benefits such as preferential procurement from the refinery. The interest free loan was offered, as the state governments could not defer the sales tax payments under the VAT regime. This apart, the project will also enjoy exemption from central sales tax (CST). However, as the empowered committee of VAT had proposed phasing out of the CST, HPCL authorities were apprehending that the benefit might not be available in reality.
It may be mentioned that contention over fiscal benefit had put the project on hold for last two years. HPCL was previously offered a more lucrative package by the former Akali Dal Government which was reversed by the existing Government on the grounds that it would harm the State economy.