Bharat Petroleum Corporation has restarted groundwork for the decade-long 6 million tpa Bina petroleum refinery project in Madhya Pradesh. The project is scheduled for completion by April 2009.

BPCL has appointed Engineers India to estimate the revised cost and prepare a detailed process configuration study. These reports are likely to be ready by end-May 2005.

The project cost had escalated from Rs.5,277 crore (1995 estimate) to Rs.6,354 crore (2001 estimate). The project is also likely to undergo revisions both in scope and execution. The base oil plant, which was supposed to be part of the Bina refinery, has now been dropped since BPCL is implementing the same at its existing Mumbai (Mahul) refinery. Further, BPCL has proposed to go into for divisible turnkey contract as opposed to the lump sum contract envisaged earlier.

The Madhya Pradesh government is likely to offer fiscal incentives in the form of deferment of commercial tax (@Rs.250 crore per year) for 15 years from the date of commercial production. The MP government is expected to formalize this fiscal concession in May 2005. Further, the state government is also likely to pick up equity stake in the project in lieu of the land given to the refinery at concessional rates.

First proposed in 1995, the Bina refinery project was supposed to be a joint venture between BPCL and Oman Oil Co, which subsequently pulled out of the project. After BPCL decided to go solo on the project, the issue of sales tax concessions with the Madhya Pradesh government consumed several years.

Also See:

BPCL to set up base oil unit in Mumbai (02-Sep-04)

BPCL to go ahead with Bina refinery (01-Sep-04)

HPCL seeks stake in Bina refinery project (29-Mar-04)