Work begins at Bina refinery

Financial closure yet to be signed

Higher interest rates have cast a shadow on the Rs 9,000 crore Bina refinery project, coming up in the Sagar district of Madhya Pradesh. Even after two months of talks, Bharat Petroleum Corporation Ltd, one the promoters of the project, has failed to come up with the financial closure of the project.

However, Industry Minister Babulal Gaur, along with his team of officers, is stressing the project is on. Interest rates have gone up by at least 3 percentage points since January this year.

"Talks with a consortium of 14 banks are going on for a Rs 6,000 crore loan but the corporation is negotiating on interest rates," a source told Business Standard.

The state industry department said last week: "Initially, Rs 55 crore was given for works in the first phase for this joint venture. Under the first phase, work on boundary walls of the plant, the hostel, roads and houses for the staff are being taken up." Construction work has started informally.

BPCL Chairman Ashok Sinha visited the site yesterday.

Sources have also not ruled the possibility that further delay in the implementation of the project may force the other partner, Oman Oil, to pull out completely although the company's managing director, RP Singh, told Business Standard on March 27 in Bhopal: "Oman Oil has the first right to refusal on increasing stake. The company's board is discussing it and they may decide on the partnership in the project soon probably next month." He said financial closure would be there by the end of April.

A senior state government official said a task force comprising principal secretaries of a number of state government departments had been formed to clear hurdles in the project. An 80-km stretch of Guna-Sironj-Bina, which connects the project site to Mumbai, is in very bad shape and needs reconstruction. "The patch will be constructed through bond build own and transfer scheme with almost Rs 100 crore," said the official. A railway over-bridge in Agasod (the project site) and a side grading job of Rs 35 crore is yet to be cleared.

According to a top bureaucrat in the department of industry, Madhya Pradesh, the company has asked for "an exemption in diversion tax on the entire land area."

The state government has deferred tax payment for the company on crude for 16 years from the date of the notification. "Tax exemption must equal the capital investment in the refinery. Besides, the entry taxes payable on raw material (crude) to be used in the construction of the refinery and the plant/machinery to be installed in it have also been exempted," according to the statement of the industry department.