Negotiations over refinery project is expected to stretch long as both Rajasthan government and oil major Hindustan Petroleum Corporation Ltd (HPCL) refused to their position over price revision According to sources, both parties have major differences over the availability of crude oil to keep a 9-million tonne (MT) refinery operational for at least 30 years.
HPCL is relying on the conservative figures of directorate of hydrocarbons (DGH) which estimates reserves to be around 380 MT.Rajasthan governments, however, based on the estimates of Crain India has argued that availability is much more.
According to the sources, to strengthen its case, Rajasthan government is planning to approach DGH to validate the revised figures."Discussions are on but still there is no meeting of minds.
Both the stakeholders are though positive about the final outcome," said a senior official who is privy to developments. Along with it issues like fixing internal rate of return (IRR) and financial assistance of Rs 37 billion as viability gap funding remains at core of ongoing discussions.
In addition, the unilateral decision by the oil company to raise capital cost by Rs 70 billion have become point of contention."HPCL has come down from their earlier 15% IRR. But even revised estimates are too high when compared with other refineries in the country," added the official.
According to the company though the size of the refinery remains the same, the unit will cost more because it now has to be built to produce Euro-VI grade petrol and diesel.