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Centre ready for talks on IOCL-Odisha govt face off

Is open to increasing its commitment in financing IOCL's 15-million-tonne crude refinery at Paradeep

Petroleum Minister Dharmendra Pradhan
Petroleum Minister Dharmendra Pradhan
Nirmalya Behera Bhubaneswar
Last Updated : Apr 01 2017 | 5:29 PM IST
The Centre is ready for a fresh dialogue to break the deadlock between the Odisha government and Indian Oil Corporation Ltd (IOCL) over award of fiscal incentives to the company’s 15-million-tonne crude oil refinery at Paradeep
 
“The present government at the Centre is not responsible for the delay in setting up of the project (of IOCL). The expansion of the refinery’s capacity from nine million tonnes to 15 million tonnes is good for the people of the state. If the Odisha government feels that there should be more financial support from the Centre to minimise the state’s burden, we are ready for a fresh negotiation”, Dharmendra Pradhan, Union minister of state for petroleum & natural gas said here at the launch of BS-IV grade fuels across the country.
 
“I have directed the officials of the ministry and IOCL to go for fresh talks without incurring any business loss”, he added.
 
In February, Odisha’s cabinet had approved a proposal to withdraw an incentive of interest-free credit, which is equal to the sales tax, for 11 years given to IOCL. The agreement for interest-free credit for 11 years to the refinery project was offered to the IOCL refinery as per an agreement signed in 2004 to ensure the project’s viability given its original rated capacity of nine million tonne per annum (mtpa). Later, IOCL ramped up the refinery’s capacity to 15 mtpa. The state government felt with the expanded capacity, IOCL was capable of maintaining viability and this obviated the need for deferment in value added tax (VAT). Also, the state government flagged its contention that the refinery project was delayed.
 
Accordingly, the state government had issued a demand notice worth Rs 1,485 crore payable as VAT by IOCL on February 27. IOCL contested the state government’s notice in the Odisha High Court.
 
In a setback to the state government, the Odisha High Court recently ordered to keep the demand notice in abeyance served to the oil marketing company, seeking payment of Rs 1,485 crore pending as VAT.
 
The court had directed the working group comprising secretary of Ministry of Petroleum and Natural Gas, officials of IOCL and the Odisha government to look into the grievances of the state and complete the exercise in two months.
 
Pradhan, however, said, the state government was aware of the expansion plan of the refinery by IOCL.
 
“IOCL will meet all the demands of the state government regarding employment”, he added.