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Revised Refinery MoU to save Rs. 40,000 crore Biggest Ever MoU Worth Rs 43,000 crore in History of Rajasthan

Jaipur, April 18. In presence of Chief Minister Smt. Vasundhara Raje and the Union Minister of State for Petroleum Shri Dharamendra Pradhan an Memorandum of Understanding (MoU) was signed on Tuesday between Hindustan Petroelum Corporation Limited (HPCL) and Government of Rajasthan to establish a Refinery-cum-Petrochemical Complex in Barmer. This revised MoU would save Rs. 40,000 crore towards the economic burden on the state government for setting-up the refinery.    

 This would be the biggest ever investment project in Rajasthan amounting to Rs. 43,129 crore. Also, this refinery would produce petroleum products with BS VI emmission standards. Another Business Transfer Agreement was signed between Rajasthan State Gas Ltd (RSGL) and GAIL Gas Ltd for distribution of piped domestic gas in Kota City.          

 Smt. Raje, while addressing the MoU signing ceremony organised at Hotel Hilton, said that this MoU was an apt reply to those who were questioning the state government's intent to set-up the refinery. She said that there was not an iota of doubt in the government's intent, but the whole idea was to secure interests of Rajasthan and the nation.         

 The CM thanked Prime Minister Shri Narendra Modi and the Union Minister Shri Pradhan. She said that this revised MoU for setting-up the refinery could be possible only due to positive and active support of the Union Government. She said that instead of political loss and gain, this new agreement would protect the interests of the people of Rajasthan. She said that now efforts would be made to ensure that the work on refinery got started as soon as the monsoon season ended.

 The Chief Minister said that Rajasthan was producing one-fourth of the total crude production in India. Thus, establishment of this refiney would be beneficial for the state. This project would act as an anchor industry for the entire state and particularly western Rajasthan, she added.  Subsidiary and service sectors would be developed in a big way in this region and ample employment opportunities would be created.       

Smt. Raje then sought the Union Ministry's help for developing and running various skill development courses for the Petroleum sector in the state's ITIs. This would help the state's youth avail employment opportunities generated in this and subsidiary industries. She also asked the union government to provide a rail link to connect the proposed refinery with the sea port so that transportation of petroleum products could become easier.          

On the agreement between RSGL and GAIL, the CM said that with this, the pipeline network for domestic gas supply installed in Kota city was transfered to RSGL. This would accelerate the actual distribution of gas through pipeline. She said that providing piped domestic gas was a major step in direction of clean energy and upliftment of lifestyle of the public.       

The Union Minister of State Shri Pradhan said that it was due the efforts made by PM Shri Modi and CM Smt. Raje that the interests of the people of Rajasthan could be protected in this MoU. He said that as per the agreement, total investment worth Rs. 43,129 crore would be done in establishing this refinery. On the other hand, Cairn Energy would investment another 27,000 crore rupees in next four years to increase oil production. After securing all approvals and clearances, the work to set-up the refinery would start within this financial year, he added.    

Shri Pradhan said that previously, in the name of MoU, a fraud was done with the people of Rajasthan in the election year. The biggest ever project in the state was ignored to earn electoral gains. Earlier the union governments used to give doles to the state governments, he said further adding that now the Prime Minister broke away the age-old tradition and strengthened the states by promoting cooperative federalism.  The Union Minister said that Barmer refinery would make use of lastest technology of the world. In this installation, the local as well as imported crude oil would be processed, refined and improvised.    

 

Rajasthan's Minister of State for Mines and Petroleum Shri Surendra Pal Singh said that this refinery would be the biggest ever investment in the state and it would be recored in golden words in the history of Rajasthan. Chairman and Managing Director of HPCL Shri MK Surana gave the welcome address during the function, while Principal Secretary Mines & Geology Smt. Aparna Arora proposed vote of thanks.    

On the MoU, Principal Secretary Smt. Arora signed on behalf of the state government and Director Refineries of HPCL Shri Vinod S Shenoy signed on behalf of the corporation. On the other hand, , Chief Executive Officer of Gail Gas Ltd Shri PK Pal signed the business transfer agreement with Ravi Agarwal of RSGL. On this occasion, the members of the Council of Ministers, Chief Secretary Shri OP Meena, Secretary Petroleum and Gas of in the Union Ministry Shri KD Tripathi, CMD of GAIL Shri BC Tripathi, several public represenatatives, dignitaries and general public from Barmer, officals of the HPCL and the state government officers were present.   Previous Refinery MoU was a project of loss     

Earlier an MoU was signed with HPCL to establish a Refinery-cum-Petrochemical Complex in Barmer in 2013. As per this, Rajasthan was given 26% partnership in the project with the viability gap funding (VGF) payment worth Rs. 60,000. Now, the present state government re-negotiated the agreement. This resulted into the burden of setting-up the refinery on Rajasthan government was reduced by almost two-third. On the other hand, the earlier 2% Return of Investment for the state government was now estimated to be almost 12%.

Comparison of two agreements  

Previuos MoU Present MoU State's monetary support to project against 26% equity   Rs. 3,871 crore Rs. 3,738 crore VGF for 15 years Rs. 3,736 crore per year Total Rs. 56,040 crore Rs. 1,123 crore per year Total Rs. 16,845 crore Total burden on Rajasthan Rs. 59,911 crore Saving of Rs. 39,328 crore