Bid & Tender
PM to Commence Barmer Refinery Project Tomorrow, Says Pradhan

Date : Jan 15, 2018

Prime Minister Narendra Modi’s visit to Rajasthan on January 16 to lay the foundation stone of the proposed Rs 431.29 billion Barmer refinery project is set to provide the much-needed booster shot to the ruling BJP in the state ahead of the assembly elections due later this year.

 

Union petroleum minister Dharmendra Pradhan has already said that the BJP governments at Centre and in state have worked out a deal favouring Rajasthan that will have 26% stake in the project. HPCL will own 74% stake in what has been billed as India’s first greenfield Bharat Stage VI (BS-VI) petrochemical project.

 

Pradhan also said that “work on the project will commence” when PM visits the site. The Rajasthan BJP, insiders said, will now be aggressively touting the refinery’s prospects for creating jobs once it becomes operational in 2022-23.

 

As part of this initiative, chief minister Vasundhara Raje has flagged off 30 ‘raths’ that will visit different villages where company volunteers will create awareness about the benefits of the petrochemical project by showing documentaries and staging street plays. The publicity campaign will cover 29 districts over the next 15 days.

 

“The project will generate indirect employment for 40,000 people during peak construction phase and a direct employment for 1,000 people,” a petroleum department official said. Opposition Congress, meanwhile, is up in arms as Vasundhara Raje government cancelled an earlier MoU signed by the Gehlot government with HPCL in 2013. The then Congress president Sonia Gandhi had laid the foundation stone at the same location in Pachpadra in September 2013.

 

While both Congress and BJP are vying to take the credit for the refinery, a comparison of the two MoUs — the one signed in September 2013 by Congress government that was cancelled and the fresh one signed in April 2017 —shows that state’s monetary burden has come down but the clause of linking the incentive with the finished oil production has been removed.

 

The state’s equity in the project remains the same at 26 per cent, something that the state government was trying hard to increase. While the previous MoU pegged the state’s monetary support to the project at Rs 38.71 billion, the new agreement brings it slightly down to Rs 37.38 billion. The state’s monetary burden has been brought down by the reworked viability gap funding (VGF). Under the previous MoU, the state was to contribute Rs 37.36 billion as VGF for 15 years. The new agreement brings this down to Rs 11.23 billion; the total proposed VGF now being Rs 168.45 billion compared to Rs 560.40 billion under the previous pact.

 

The refinery also got an upgrade to BS-VI in the new deal as against BS-III in the older pact. Out of 9 MT, the refinery is projected to use 2.5 MT crude from Rajasthan’s oilfields while 6.5 MT will be a mix of imported and domestic crude oil, which will be brought through a pipeline. Addressing a press conference in New Delhi earlier this week, Pradhan had said that under the new design and configuration, which includes petrochemicals, the project will have a 12% internal rate of return (IRR) instead of 6% (in the previous agreement signed by Congress for BS-III project). However, the Congress has alleged that the four-year delay has caused a loss of Rs 500 billion. Former chief minister Ashok Gehlot said, “The prime minister should have inaugurated the refinery rather than lay its foundation stone for a second time.”

 

A state petroleum department official in the know of things said that cost escalation was due to superior technology being used to ensure BS-VI compliance. No official has an answer as to why it took four years to renegotiate the deal. Gehlot has alleged that the delay was deliberate as the BJP wanted to extract political mileage ahead of assembly elections likely in December this year, a charge that state BJP president Ashok Parnami has denied. State petroleum department principal secretary Aparna Arora refused to comment. A questionnaire sent to her remained unanswered at the time of going to press.