Rajasthan will save nearly Rs 40,000 crore from the revised Viability Gap Funding and project plant for Hindustan Petroleum Corporation’s Barmer refinery cum petrochemical complex.

Speaking to reporters, Minister for Petroleum and Natural Gas, Dharmendra Pradhan said, “The earlier internal rate of return from the project was at 6 per cent with a viability gap support of Rs 3,736 crore per year from the state government for a 15 year period. The IRR from the project is now 12 per cent with just Rs 1,123 crore per year viability gap support from the state government.”

“The lower viability gap support and higher rate of return will lead to a saving of Rs 40,000 crore to Rajasthan,” he added. Pradhan was responding to criticism from the Indian National Congress that had raised questions over the Prime Minister Narendra Modi re-laying the foundation stone of the Barmer refinery project later this month.

He said, “the then Congress president, Sonia Gandhi had laid the foundation stone of a Bharat Stage III refinery in Barmer on September 22, 2013. The Model Code of Conduct came in force on September 27, 2013. This means that the Congress was using this project as a political stunt.”

“None of the statuatory approvals including the environmental clearance and land acquisition had been completed for the project. They are in place now,” Pradhan added.

Pradhan said that the Barmer refinery will be the country’s first Greenfield Bharat Stage VI refinery cum petrochemical project. The project is expected to be commissioned by 2022-2023.

The project has a total capacity of 9 million tonne. For this project, 2.5 million tonne crude will be sourced from the Barmer fields and the remaining 6.5 million tonne will be sourced through a pipeline connecting the refinery to the West Coast through Gujarat.

The revised capital expenditure for the project will now be Rs 43,129 crore. This includes Rs 2,500 crore additional expenditure for laying the pipeline, according to a Petroleum Ministry official. The earlier project cost stood at Rs 37,229 crore.