New MoU for Barmer Refinery: Important things you should know

Draft of the MoU finalized. MoU to be signed by the first week of May.

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April 18, 2017, 5:30 pm

CM vasundhara raje at state assembly

Jaipur: Chief minister Vasundhara Raje recently announced in the state assembly that the government would sign a new MoU with Hindustan Petroleum Corporation Limited (HPCL) to set up a refinery in Rajasthan. The MoU was signed on April 18.

Here are a few things you should know about the proposed refinery:

  • Nearly 12500 bigha land has been allotted to a join company of the state government and HPCL. The land is situated in Pachpadra, close to a salt lake.
  • As soon as the MoU is signed, the work on the laying of a crude oil pipeline (50-60 km in length) and a water pipeline (nearly 200 km in length) will begin.
  • The water pipeline will have a radius of 1 meter while crude oil pipeline will have a radius of 24 inch.
  • Refinery capacity will be 9 million metric ton.
  • HPCL’s share will be 75 percent.
  • Rajasthan government’s equity will be 26 percent.
  • The cost of refinery will be Rs 43,149 crore.
  • The state government will pay Rs 3738 crore for its 26% equity.
  • The government will give interest free loan (the viability gap funding) of Rs 16,845 crore to HPCL.
  • The viability gap funding (VGF) will be Rs 3,736 crore annually. This will be paid over a period of five years by the government.

The Rajasthan government will sign a MoU with HPCL in the presence of Prime Minister Narendra Modi.

Latest update: New MoU for Barmer’s Pachpadra refinery signed in Jaipur

After Raje’s announcement in the assembly a meeting of officials of the Rajasthan government, Hindustan Petroleum Corporation Ltd (HPCL) and the Union ministry of petroleum took place in Jaipur on April 13.

The meeting’s agenda was to finalize the draft of the MoU. The state government is yet to announce when the date when the MoU will be signed, but it can happen by the end of April or the first week of May.

Locals wait for the property prices to go up again

United Progressive Alliance (UPA) Chairperson Sonia Gandhi laid the foundation stone for HPCL refinery and petrochemical complex at Pachpadra in Barmer district in September 2013.

The first MoU was signed with HPCL in March, 2013. HPCL was to set up a 9-million-tonne refinery-cum-petrochemical complex in Thar desert near the oil discovery made by Cairn India.

Property prices skyrocketed amid reports that the area surrounding the refinery would prosper due to oil production as the project would create jobs and improve infrastructure.

Land prices in Pachpadra have shot up from Rs 25,000 to Rs 4-5 lakh per bigha in last four year.

Ancillary industries, hotels, and transport business are expected to flourish once the refinery comes up.

But as the project was delayed, property investors lost money. They had bought land near Pachpadra at exorbitant rates. They had paid locals a lot of money upfront, but when the refinery didn’t come up, the land prices skidded drastically. Locals blamed speculators for their plight.

First published: April 15, 2017