BHUBANESWAR: Indian Oil Corporation Ltd (IOCL) on Tuesday paid Rs 2,935 crore to the State Government towards VAT (value added tax) payment of its refinery at Paradip for the period from November, 2015 to July, 2017. The payment was made as per the revised agreement between the State Government and the IOCL last month.
Earlier, the State Government had announced deferment of VAT for 11 years to ensure commercial viability of the oil refinery plant at Paradip. As per the agreement reached between the two parties in the joint working group meeting under the chairmanship of Petroleum Secretary in New Delhi last month, the State Government will give Rs 700 crore interest-free loan annually to IOCL for 15 years.
“This marks the resolution of the issue of VAT deferment for Indian Oil’s Paradip Refinery in Odisha,” IOCL tweeted. Complementing the State Government and IOCL for finding a solution to the dispute over tax incentives to the refinery project, Union Minister for Petroleum and Natural Gas Dharmendra Pradhan said the new arrangement will give a big boost to the industrial growth of Odisha.
Pradhan urged the State Government to facilitate IOCL’s expansion plans in order to create downstream petrochemicals and allied industries in the state. “The proposed expansion will enable the State to increase its revenue and also create additional employment avenues for the youth,” Pradhan said.
Meanwhile, the State Government has decided to file a joint petition with IOCL in the Orissa High Court informing about the fresh agreement between the two parties on the tax dispute. IOCL took the matter to the High Court after the State Government withdrew fiscal incentives to the refinery in February this year. The dispute over tax incentives to the refinery was resolved at a meeting between Chief Minister Naveen Patnaik and Pradhan in New Delhi in August.
With a project cost of Rs 34,555 crore, the 15 million tonne per annum refinery commenced commercial production from November 2015. The refinery has the capabilities to process all types of crude oil imported from across the globe, sources in the IOCL’s State office said.
The refinery is implementing two petrochemical projects with an investment of Rs3,680 crore and another Rs 4,500 crore for production of BS-VI fuel from the refinery.