MP seeks equity share in Bina Refinery
PM News Bureau
The Madhya Pradesh government will seek equity participation in Bina Refinery project to the extent of the market value of land given at a concessional rate to Bharat Oman Refinery Ltd at Bina. In addition, the state government has decided to seek two slots of directors on the Board of Directors of Bina Refinery. These are some of the main conditions against which the state government has given fiscal concessions to the project.
One of the major concessions offered by the state government is its decision to grant the facility of commercial tax deferment. Bharat Oman Refinery Ltd will be granted a deferment of MP commercial tax of Rs 250 crore per year. The concession of commercial tax will be available for a period of 15 years from the year of commercial production. Further, BPCL will raise bonds or loans of an amount equivalent to Rs 250 crore every year to prop up the revenues of the state. The bond or loan would be raised through a nominated entity of the MP government.
However, the government will discharge every year the interest liability on these bonds for the next 15 years. The interest rate at which the bond or loan will be raised will not be more than 7 per cent per year. If it goes beyond 7 per cent the additionality would be borne by Bina Refinery. The state government will discharge the interest liability for the next 15 years and after the 16th year Bina Refinery will discharge the remaining interest liability. The cost of raising the loan or bonds every year would be borne by Bina Refinery. However, the state government will have the option of requesting Bina Refinery not to raise the bonds or loan in any particular year(s). If the state government exercises such an option, the Bina Refinery will reimburse the deferred tax of that year(s) after the expiry of the 15th year.
Besides these, there are some conditionalities for creating social and economic infrastructure including setting up of schools, hospitals, industrial estate and providing employment to the local people.
A detailed MoU will be signed by the state government with Bharat Petroleum Limited and Bina Refinery. With this, most of the hurdles blocking the commencement of the work have been cleared. The project has seen a delay of nearly 10 years, and is now scheduled for completion by April 2009. This deadline, too, may not be met.
However, the good news is that BPCL has started working on tendering process. It is learnt that it may not opt for lump sum turnkey contract for execution of contracts. Instead, the project may be implemented by conventional methods wherein the project will be tendered out in smaller parcels.
(28 Feb 2005)