No concessions, no project; Mittal tells PM
30 March 2009
Steel czar Lakshmi N Mittal has reportedly threatened to stop work on the Rs18,919-crore oil refinery project in Bhatinda, Punjab, HPCL-Mittal Energy Ltd, unless the state government restores some fiscal incentives it had taken away a few years ago.
The refinery project is a joint venture between public sector Hindustan Petroleum Corporation and Mittal Energy Investment Pte Ltd, Singapore promoted by Lakshmi Mittal, in which both companies hold a 49-per cent stake, with the remaining 2 per cent being held by the financial institutions.
The refinery will produce petroleum products complying Euro-IV emission norms with captive power plant for 165 Mw and crude oil pipeline from Mundra in Gujarat to Bhatinda with Single Point Mooring (SPM) and crude oil terminal at Mundra.
Mittal is reported to have written to Prime Minister Dr Manmohan Singh earlier this month, seeking his direct intervention in the issue that he says has threatened the viability of the nine-million-tonne a year refinery project. H told the PM that in absence of the fiscal concessions, he and Hindustan Petroleum would be "reluctantly constrained to stop work."
He has demanded concessions on par with those given by the Madhya Pradesh government to the Bharat Petroleum-promoted Bina Refinery project that would enable sales tax waiver on the fuel produced by HPCL-Mittal Energy, without which the landlocked project would not was not be feasible as Mittal is reported to be unwilling to invest beyond Rs500 crore already paid for the 49-per cent equity.
The two companies had raised Rs7,793 crore from a consortium of 26 lenders to fund the debt portion of the project. The project is being financed in a debt-equity ratio of 1:5:1.
Losing a fortune in the global economic meltdown, Mittal had contemplated quitting the project altogether, but had been persuaded to stay on with the promise that the centre would convince the Punjab government to restore fiscal concessions, according to the report, which has been widely picked up by the media.
The Indian-born billionaire has already pulled out of HPCL's proposed $6-billion refinery-cum-petrochemical project proposed at Vizag in Andhra Pradesh.