Home ECONOMY Odisha govt says no to interest-free loan to Paradip Refinery

Odisha govt says no to interest-free loan to Paradip Refinery


Odisha Sun Times Bureau
Bhubaneswar, Feb 23:

The Odisha government has withdrawn from its agreement with Indian Oil Corporation Ltd (IOCL) over the interest-free loan to Paradip Refinery.

The proposal to withdraw from the agreement was taken at the state Cabinet meeting yesterday, informed Finance Minister Pradip Amat in the Odisha Assembly today.

The state government had entered into an agreement with IOCL in 2004 to provide interest-free loan.

Odisha has withdrawn from the agreement since the state exchequer would have sustained a loss of Rs 22,754 crore, informed Amat.

“The Central government has not provided any incentive to IOCL. The state government has provided eight incentives to IOCL. The government has already offered the seven of the incentives and is withdrawing one incentive-interest free loan. The project was delayed by seven years. That apart, IOCL has expanded its capacity unilaterally. Moreover, IOCL is a profit making company, it doesn’t require an interest-free loan,” stated the Finance Minister.

Notably, on December 29, 2016, the Odisha government through a notice to IOCL asked why the fiscal incentives like 11-year deferment of sales tax on petroleum products sold in the state should not be withdrawn considering that the Rs 34,555 crore refinery was delayed by over six years.

The state government had in February 2004 signed an agreement with IOCL to give fiscal incentives for setting up a 9 million tonnes a year oil refinery at Paradip by 2009-10. However, the project was delayed and started only in early 2016.

However, as per the agreement, IOCL would have paid back the sales tax amount after 11 years albeit without interest.