Cost Trouble near Paradip

Bhubaneswar, March 30: The project cost of the Rs 26,000-crore integrated petro-chemical complex, proposed to be set up by IndianOil Corporation (IOC) near Paradip port, may escalate to Rs 46,000 crore if the tax holiday benefit is withdrawn from it.

IOC chairman Sartak Behuria, during his meeting with chief minister Naveen Patnaik at New Delhi yesterday, expressed apprehension in this regard.

Stating that seven-year tax holiday announced for various projects would be withdrawn from April 1, Behuria said if this decision was applied to IOC’s project there would be a cost escalation to the tune of Rs 46,000 crore, which would ultimately make the project unviable.

The IOC chief, therefore, urged the chief minister to take up the matter with the Prime Minister and request him not to make the decision effective for the pipeline projects.

Apprising the chief minister regarding the progress of the project, Behuria admitted that Rs 1,254 crore had already been invested on the 15MT oil refinery. Land reclamation work was on, while work on power and water supply had been complete.

Environmental clearance had been obtained from the union environment and forest ministry.

Physical construction work was expected to start soon.

Behuria said the project’s progress was on time and the project was expected to be commissioned by 2011-12.

The IOC project, originally a 9MMTPA fuel refinery at an estimated cost of Rs 7,500 crore, has been scaled up to a 15MMTPA export-oriented grassroots refinery along with a petrochemical plant with an estimated investment of Rs 26,000 crore.

Foundation stone of the 9MMTPA oil refinery project had been laid by the then Prime Minister, A.B. Vajpayee, amid fanfare in June, 2000. However, the project had continued to hang fire for four years on the issue of tax concessions.

Finally, the Orissa government conceded to firm’s request and signed an MoU with the latter on February 16, 2004, granting a package of incentives.