Rs 400 crore tax benefits sought for Bina refinery

To scout for a partner for the Bina refinery project and reassess its viability, executives of Bharat Oman Refinery Ltd (BORL) have approached the Madhya Pradesh government to seek tax incentives.

The managing director of Bharat Oman Refineries, J V S Hajuria, had discussions with Chief Minister Babulal Gaur on the issue. However, according to official sources, no conclusion emerged.

The project, which is proposed to come up at Agasod near Bina, is expected to employ 10,000 people. Representatives of the state government, Bharat Oman Refinery Ltd, and Bharat Petroleum Corporation Ltd (BPCL) have held a number of meetings on this in the past few months.

"The state government is not in a position to give tax sops of Rs 400 crore, as has been asked for, because it is already in a heavy debt," a government source said.

"We hope the state government will take a decision so that we can reassess the project's viability," a top executive of Bina Refinery said.

"BPCL and Hindustan Petroleum Corporation Ltd (HPCL) are in talks, and the latter has shown interest in picking up a stake in the Rs 6,354-crore project," a participant in the meeting with Gaur told Business Standard.

The Orissa government had given similar tax sops for Indian Oil Corporation's Paradip refinery.

"HPCL is looking to source petroleum products for their operations in central India, and the Bina project could be a good option for them. However, much will depend on the project's viability," said an official source.

Bharat Oman Refinery Ltd is looking at raising Rs 4,000 crore from financial institutions (FIs).

"We want a commercial tax cut of Rs 400 crore. The Madhya Pradesh government can consider deferring the sales tax for at least 11 years," said C K Jain, chief general manager, Bharat Oman Refinery Ltd.

Minister for Industries Kailash Chawla is reported to have shown interest in offering subsidies, but Bharat Oman is opposed to the idea. Chawla was not available for comment.

The refinery will have an annual capacity of six million tonnes. "It can sell 1.4"�1.6 million tonnes of petroleum products in the state," an official source said.

The Bina refinery, in which BPCL holds a 51 per cent stake, is slated for completion in 2008. Oman Oil Company holds about a 2 per cent stake and the remaining equity is to be offered to a strategic partner.