Refineries in North-East are drilling deep hole on the exchequers and the recent demand of inclusion of inland freight in the Refinery Transfer Price (RTP) is only going to compound the problem for the government. Originally refineries in North-East were set up with an eye on “social development” of the region and also to tap the locally available crude oil. Hence there was no question of inclusion of inland freight in the RTP. However, the situation is slowly changing due to increased local agitations and need to import crude oil from outside.
North-East has a demand of 3 MTPA POL and Assam produces 5 MTPA of crude oil. Demand by the locals that the crude oil in Assam should be refined within the state and not exported out to Barauni Refinery has made matter difficult for the government. The pipeline from Bongaigaon in Assam to Barauni is now used to import crude from Haldia to Bongaigaon. Also Numaligarh Refinery is planning to expand its capacity from 3 MTPA to 9 MTPA involving a capex of Rs. 10,000 crore. Crude for the refinery will be transported from Dhamra port in Orissa through crude oil pipeline with a length of 1,338 km. It is all but natural that these refineries demand the inclusion of inland freight in RTP. But the problem is – will the new cost make these refineries viable? It should be noted that the central government offers a 50% excise rebate on their output besides subsidizing their onward transportation to the markets.