PM urged to intervene in stalled Rajasthan refinery project

Posted on 20th Mar 2015 by mohit kumar

Jaipur, March 19 (IANS) Prime Minister Narendra Modi was Thursday urged to intervene in a stalled nine MMTPA refinery project in Rajasthan that the present BJP government says is a case of "cheating" the public.

"The refinery is a big project that would contribute in the development of the state. The refinery will not only give economic benefits to the state but will also provide employment to thousands of youth. By delaying its construction, the state government is crushing the interests of the state due to political rivalry," former chief minister Ashok Gehlot of the Congress said in a statement.

The former chief minister said that the refinery was to be established by HPCL-Rajasthan Refinery Ltd. (HRRL) - a joint venture company of HPCL and the government of Rajasthan.

"HPCL is a central government undertaking still the present government is misleading people by repeatedly saying that the share agreed by the earlier Congress government is a pact of loss since the land, water and oil belong to the state. Whereas the fact is that the state government will fully recover the amount for land and water from the project. The state government will have a contribution of Rs.200 crore in the refinery in lieu of the land to be given for the project," he added, urging Modi to get the project off the ground.

However, the present chief minister, Vasundhara Raje, has a different take on this.

Raje, while replying to the debate on state budget recently, said: "Despite the state contributing double the amount of the total cost of this project, its share was limited to merely 26 percent. Against the total cost of Rs. 37,400 crore, the state commited to pay Rs. 56,400 crore in (the shape of) cash, water, roads and 4,800 acres of land at a nominal cost of Rs. 300 crores only."

"This way, it was a failed deal. Eyeing immediate benefits during the elections, the then state government decided this case of investment in just 30 hours. No financial and economic analysis was done for this project," she added.

Gehlot's government had entered into a Memorandum of Understanding (MoU) with HPCL for establishing the refinery-cum petrochemical complex at Barmer district at an estimated cost of over RS 37,230 crores in March 2013. A JV agreement was signed in July 2013 between HPCL and the state government.

The proposed refinery was to be a subsidiary of HPCL, whose equity share was to be 74 percent, while 26 percent was to be held by the state government. The project cost was proposed to be sourced with a debts/equity ratio of 1.5:1. The total equity component was Rs.14,892 crore and the debt was Rs.22,338 crore.

HPCL's equity contribution was put at Rs.11,020 crore and the state government's at Rs.3,872 crore.

Incentives in terms of an interest-free loan for 15 years were considered to be provided by the Rajasthan government to HPCL.

As per the terms and conditions, every year, an interest free loan of Rs 3,736 crore was to be provided by the state government to the JV for 15 years beginning from the year commercial production commenced at the refinery.

The Raje government felt that the incentive to be provided by theAstate government was very high and may adversely impact the state's economy.