Hindustan Petroleum Corporation is gearing up for financial closure of its 9 million tpa greenfield petroleum refinery coming up in Punjab. The Rs.9,806 crore project (1998 cost estimates) known as the Guru Gobind Singh Oil Refinery is coming up at Phulokhari in Bhatinda district of Punjab.

The project is likely to escalate substantially given the time overrun and the change in project scope. The refinery would be configured to produce Euro IV fuel.

HPCL has already appointed Engineers India for preparing a fresh detailed feasibility report. Discussions have begun to finalize the project configuration and the product details.

HPCL, though hopeful of a strategic partner, will go ahead with the project unmindfully. Project financing details are likely to be finalized in the next 2-3 months.

It may be recalled that HPCL received a deed of assurance (DoA) from the Punjab Government in the last week of June 2005. The assurances included an interest free loan of Rs.250 crore per year for five years and non-fiscal benefits such as preferential procurement from the refinery. The interest free loan was offered, as the state governments could not defer the sales tax payments under the VAT regime. This apart, the project will also enjoy exemption from central sales tax (CST).

It may be mentioned that contention over fiscal benefit had put the project on hold for last two years. HPCL was previously offered a more lucrative package by the former Akali Dal Government which was reversed by the current government.

Also See:

Relocation of HPCL's Punjab refinery ruled out (15-Mar-05)