MP to sign Bina deal tomorrow

Bharat Oman Refinery Ltd (BORL), promoted by Bharat Petroleum Corporation Ltd, has received more tax sops for its Bina refinery project than announced by the Madhya Pradesh government.

BORL and the Madhya Pradesh government will sign a memorandum of understanding in Mumbai at a Ficci convention (arranged by the MP State Industrial Development Corporation) on May 6 in the presence of Chief Minister Babulal Gaur.

The company will get tax sops to the tune of Rs 3,750 crore for 16 years, from the start of production, one of the biggest offers in the state so far.

It is, however, yet to disclose its financial arrangements and possible partners in the venture. According to sources, Oman Oil Company, which earlier pulled out from the venture, has again shown interest in the project.

"In order to meet the shortfall in the revenue due to these sops, the state government will float BORL-guaranteed bonds in the market," a company source told Business Standard.

The value of these bonds will not exceed the quantum of financial assistance to BORL.

"Bonds will be redeemable in 15 years and BORL will provide full guarantee to the government of Madhya Pradesh," an official said, adding, "BORL will reimburse half of the cost incurred in issuing each series of such bonds."

Insiders say there is provision for the creation of an industrial area by the MP Audyogik Kendra Vikas Nigam in the 12-point deal. "If MPAKVN develops an industrial area at Bina and borrows funds, BORL will give guarantee for repayment of such borrowings," an official source said.

The Bina refinery has also been given more sops since BJP government is focusing on employment generation and contemplating the development of a petro complex at the site.

"A clause of the MoU saysBORL has to reserve III and IV category jobs to those domiciled in Madhya Pradesh but not more than 60 per cent of the total jobs," said a source.

The state government has exempted BORL from the central sales tax on sales outside Madhya Pradesh for a period of 16 years from the date of the commencement of commercial production.

Similarly, crude required by the refinery and sourced from outside MP will be exempted from tax.