It seems BPCL has no option but to shelve its Rs 20,000 crore expansion of the Numaligarh Refinery after the central government has decided to suspend fresh registration of industrial units under the North East Industrial and Investment Promotion Policy (NEIIPP), 2007 as the committed liabilities under the package were already far greater than its annual budget allocation.
8No new registrations are being entertained from December 2014.
8New investments in refineries in the North East are no longer viable as the key incentives for setting up additional capacities have been suspended.
The following incentives were given under the policy:
--Central Capital Investment Subsidy @ 30% of investment in Plant and Machinery
--Central Interest Subsidy @ 3% of working capital loan availed for a period of 10 years from the date of commencement of commercial production (DOCP)
--Reimbursement of insurance premium paid towards insurance of fixed capital assets for a period of 10 years from DOCP
--Excise Duty exemptions for a period of 10 years from DOCP
--Income Tax exemption for a period of 10 years from DOCP
8Clearly, what BPCL had sought was a capital subsidy of a whopping Rs 8,800 crore that in fact goes well beyond the 30% limit laid by the now defunct policy.
8Over and above that the excise exemption would have been a large amount of money too.
8"Given that the policy has been withdrawn because the obligations are already more than the annual allocation under the head, it seems unlikely that the government would have taken on the onus of a Rs 20,000 crore investment by BPCL. And while Assam is going to polls and every kind of promise is likely to be made in the run up to the polls, it will indeed be foolhardy in today's day and age -- when disruptive technology can make the use of diesel and petrol redundant -- to mount such a massive investment ridding piggyback on a government subsidy regime," a government official said.
8There is a already a demand to reduce subsidies on fossil fuel investments because of global warming and in this context, any fresh investment that does not earn an IRR beyond the hurdle on free market economics should be actively discouraged by the petroleum ministry.
For more details visit indianpetroplus.com
8No new registrations are being entertained from December 2014.
8New investments in refineries in the North East are no longer viable as the key incentives for setting up additional capacities have been suspended.
The following incentives were given under the policy:
--Central Capital Investment Subsidy @ 30% of investment in Plant and Machinery
--Central Interest Subsidy @ 3% of working capital loan availed for a period of 10 years from the date of commencement of commercial production (DOCP)
--Reimbursement of insurance premium paid towards insurance of fixed capital assets for a period of 10 years from DOCP
--Excise Duty exemptions for a period of 10 years from DOCP
--Income Tax exemption for a period of 10 years from DOCP
8Clearly, what BPCL had sought was a capital subsidy of a whopping Rs 8,800 crore that in fact goes well beyond the 30% limit laid by the now defunct policy.
8Over and above that the excise exemption would have been a large amount of money too.
8"Given that the policy has been withdrawn because the obligations are already more than the annual allocation under the head, it seems unlikely that the government would have taken on the onus of a Rs 20,000 crore investment by BPCL. And while Assam is going to polls and every kind of promise is likely to be made in the run up to the polls, it will indeed be foolhardy in today's day and age -- when disruptive technology can make the use of diesel and petrol redundant -- to mount such a massive investment ridding piggyback on a government subsidy regime," a government official said.
8There is a already a demand to reduce subsidies on fossil fuel investments because of global warming and in this context, any fresh investment that does not earn an IRR beyond the hurdle on free market economics should be actively discouraged by the petroleum ministry.
For more details visit indianpetroplus.com
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