New Delhi: Odisha Chief Minister Naveen Patnaik today claimed that he is very positive of an amicable solution to the dispute between Indian Oil Corporation Limited (IOCL)’s Paradip Refinery and State government.
“We have discussed the manner of finding a solution to the IOCL problem. We hope we will come to an amicable solution with the IOCL as far as the State government is concerned,” said Patnaik briefing reporters at the Odisha Bhawan here after his meeting with Union Petroleum and Natural Gas Minister Dharmendra Pradhan on the IOCL issue.
Responding to queries by reporters whether the meeting was in the right direction or it was an exercise in futility Patnaik said: “No I think I am very hopeful for a positive result”.
On the other hand, Union Minister Pradhan said that the terms and conditions reached in 2004 suits neither, so it needs to be changed.
He further emphasized on finding a solution to the issue through dialogue.
“We all, both the Central and State governments are committed to safeguarding the interests of Odisha. At least we have no objections on this. It can be reconsidered in the interest of Odia people. In our discussions with the Chief Minister, we are hopeful of finding a way to resolve the issue soon which will be beneficial to both sides-State government, people of the State and IOCL. We are hopeful of finding a mid path to resolve the issue. I think we will find a solution,” informed Union Minister Pradhan after his meeting with the Chief Minister on the IOCL issue.
Today’s meeting between Patnaik and Pradhan was held after several working group meetings failed to resolve the dispute.
Officials from the Petroleum & Natural Gas Ministry and IOCL along with State Chief Secretary and Development Commissioner were present in the meeting.
It may be noted here that IOCL’s Paradip Refinery had moved the High Court against Odisha government’s demand note of Rs 1485 crore on it towards pending taxes.
The High Court on March 16 had asked the State government to keep its demand in abeyance and resolve the issue through a working group comprising of officials of IOCL, Petroleum and Natural Gas Ministry and State government within two months.
It’s worth mentioning here that the state government and IOCL had inked a memorandum of understanding (MoU) for the establishment of Paradip Refinery on February 16 in 2004.
According to the MoU, the State government had agreed for VAT deferment for 11 years on IOCL’s products sold inside the state from the date of commencement of commercial operations of the refinery.
Further, as per the agreement, IOCL would start repayment of the VAT from the 12thyear from the date of commencement of commercial operations of the refinery albeit without interest. This would be considered as an interest-free loan to IOCL.
The tax concession was extended to IOCL considering its operational viability, local employment, and the region’s economic growth.
IOCL had collected Rs 1,485 crore towards VAT from sales in Odisha since it’s launching of commercial operations till the end of December last year.
The state government on February 27 last served a demand note of Rs 1485 crore on IOCL towards pending VAT citing breach of the agreement.