• BJD joins Paradip battle – IOCL making huge profits, no need for concession

    The BJD today justified state government’s decision to withdraw tax concession extended to the Indian Oil Corporation Limited (IOCL)’s Paradip oil refinery on the ground that the project had started making profit. The BJD articulated its stand on the issue, now the focus of a verbal war with the BJP, after Union petroleum minister Dharmendra Pradhan accused the state government of violating the spirit of the MoU with the IOCL by reneging on its earlier promise with an ulterior motive in mind. The state government on February 23 had withdrawn the tax concession given to the 15-million tonne public sector refinery raising the hackles of BJP leaders.

    Pradhan said: “Odisha had agreed on the tax deferment for 11 years in 2004. Now, upset with their debacle in the panchayat polls and their grudge against me they have violated the spirit of the MoU.” Pradhan said the ministry of petroleum has an ambition plan to invest Rs 1250 billion in the state. “But by withdrawing tax concession the state government is blocking the investments coming to the state. This will affect job opportunities of Odia youths,” he said.

    Denying the allegation, BJD spokesperson Pratap Keshari Deb said: “The MoU has two operative parts. The main objective of the state was to provide all facilities to make the refinery viable. But after petroleum products were de-regularised and the subsidy to them withdrawn. There is no need to provide tax exemption to the refinery.” The state government had signed the agreement for the refinery in 2004 when the oil market was not favourable. To make the project viable, the state government had agreed to provide all sorts of tax exemptions including interest-free loan.

    “The refinery was to commence operation in 2008-09. But the work was delayed and it started its commercial production in 2015-16 only,” he said adding that the refinery had made a profit of Rs 158 billion last year. “When it is making such huge profits, where is the need for concessions like tax exemption?” asked Deb. Besides, the IOCL had unilaterally enhanced the refinery’s production capacity from nine million tonnes to 15 million tonnes. However, according to the agreement the concession had been given on a production capacity of nine million tonnes.

    Deb said that by extending tax concessions to the project the state government would be incurring a loss of Rs 227.45 billion, which would be much higher than the loss of Rs 44.12 billion on account of these concessions that was projected when the MoU was signed. He said: “The state continues to extend support to the project in the form of waiving taxes like octroi. They got concessions to the tune of Rs 5.76 billion last year. They should not ask for more.”

    The party also raised questions over the claims about the employment opportunities that the project would generate. Taking on the Union minister, Deb said: “The refinery has been constructed using modern technology. It has created only a few white-collar jobs. Pradhan should tell people how many Odias have got jobs at the oil refinery?” Deb clarified that the decision to withdraw was an administrative decision.

    “The state government had issued a noticed to the IOCL in December 29, 2016, seeking a reply as to why the provision of tax exemption should not be withdrawn. The IOCL replied to the notice on January 17, 2017, and the state government took up the issue on February 9, 2017. Later, the state cabinet took the decision to withdraw concession on February 22, 2017,” he said. The issue may find an echo in the Assembly tomorrow when finance minister Pradip Amat presents the budget in the House. The size of the budget that is expected to reflect state government’s larger planning as well its financial constraints may be in the order of Rs 1060 billion. Kareem Martin Jersey

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