The fresh memorandum of understanding (MoU) inked between the Rajasthan government and Hindustan Petroleum Corporation Limited (HPCL) to set up India’s first Bharat Stage-VI (BS-VI) oil refinery and petrochemical complex in Barmer district has revived the hope of denizens of the desert.
For three years, hopes of the people living in Barmer were oscillating as the present BJP government finally decided to revive the project. The revised MoU of the project worth Rs 43,129 crore took place in the presence of Minister for Petroleum and Natural Gas Devendra Pradhan and Rajasthan Chief Minister Vasundhara Raje on April 14, 2017.
However, the refinery complex will be set up at the same 4,800 acres of land allotted by government of Rajasthan in Pachpadra-Baytu region of Barmer district. One of the famous attractions in the city is the Pachpadra Lake, which is known for salt collection around it.
In 2013, the Congress government had signed an MoU with HPCL to set up a nine-million-tonne refinery-cum-petrochemicals project with an investment of Rs 37,000 crore. But Raje-government junked the MoU and put the project under review in July 2014. The BJP government claims that it has renegotiated the terms and conditions with HPCL unlike the old MoU which had less share for the state and had interest-free loan package.
Rajasthan’s principal secretary (mines and petroleum) Aparna Arora, who signed the MoU on behalf of Rajasthan government, with Director Refineries, HPCL, Vinod S Shenoy, told DH, “The project cost escalated from Rs 37,000 crore to Rs 43,129 crore, but it will be India’s first on BS-VI norms — environment-friendly and less pollution. The government plans to move to BS-VI emission norms by 2020. The viability gap funding (VGF), which was Rs 3,736 crore for 15 years to be given by state government, has come down to Rs 1,123 crore. The project life will be 30 years after it starts operations. The state government’s return on investment has been increased to 12% from 2%. The government will invest Rs 20,865 crore in 15 years as VGF and equity share (26%) in the refinery.”
She claimed that the refinery will process 2.5 MT crude annually and will remain operational even if the oil level depletes as crude oil will be imported with no additional financial burden on the state. “We have started working as a JV company HPCL-Rajasthan Refinery (HRRL). Officials also visited the spot and gave their report,” she added.
According to sources, the government has fast tracked the project for its launch by October end or November, and is also planning to get it launched by Prime Minister Narendra Modi. The officials have been given a target of getting environmental clearance in the next three months from Vasundhara, who herself is monitoring the project. “Usually, big projects take time of 8-9 months to get environmental clearance, but we are trying our best to get the approval in the next three months,” sources said. The crude oil will be supplied from nearby oil fields operated by Cairn Oil and Gas. Currently Barmer crude oil is being transported to Jamnagar refinery and others through a pipeline between Barmer and the coastal area of Gujarat.
This oil refinery project ,which aims to change the profile of the Thar desert will be the largest investment in the state after Indira Gandhi Canal. As Pradhan stated, “This is a historic MoU. This will generate development and employment.” State government claims that this refinery will give one lakh direct and indirect jobs.
According to analysts, jobs in offing will be for masons, supervisors, mechanical engineers, brick construction, stone suppliers, RCC, short term, and semi-scale workers and security guard among others. Moreover, there will also be openings in the engineering field for petroleum, chemical and mechanical branches.
Vasundhara Raje, who calls it as a successful beginning in the financial year of 2017-18, is being criticised by former chief minister Ashok Gehlot, who asserts that government’s claims about saving Rs 40,000 crore through fresh MoU on the Barmer oil refinery is “half-truth”. Gehlot told DH, “The revision in annual viability gap funding in the form of interest-free loan for 15 years, which the Raje-government claims to have achieved through series of negotiations with HPCL in the past four years, was already provisioned in the MoU signed by his government in 2013. We demand that details of the old and fresh MoUs should be made public. I request Dharmendra Pradhan to order an investigation if the state’s interests were compromised in the earlier MoU.”
Countering the criticism, Raje alleges Congress government for signing the previous MoU in haste. “Congress is known for laying foundation stones and then forgetting to complete them, hence converting the land into graveyard. We believe in the vision of Modi, which is why this landmark initiative took place today,” Raje said.
Referring to the new MoU, people in Barmer are optimistic, while many doubt it as a move to gain political mileage like the previous Congress government. “Just signing an MoU or putting up a foundation stone is no guarantee. Only once the construction work begin, people will believe that oil refinery will be established,” said Jama Ram, a hotel owner in Barmer.
People are also being critical of the government for laying the foundation stone for the same project twice, though many see it as a positive sign. “It’s good that foundation stone will be laid again. We hope Modi comes for that, because he keeps promises. Now government should start construction of refinery soon so that youth get employment,” Sahi Ram, Barmer-based trader said.
In the last decade, Barmer, which has witnessed a transformation after Cairn Energy had set up its oilfields in 2008, about 100 kilometre from Balhotra, has seen lots of ups and downs. After Gehlot announced the refinery in 2013, land prices in Pachpadra shot up from Rs 30,000 to Rs 4-6 lakh per bigha (In Rajasthan, one bigha is equal to 17,426 sq feet). As real estate prices broke record, luxury cars and SUVs replaced jeeps, hotel business mushroomed and banks rushed to cash on it. But after BJP put the refinery on hold many people faced losses especially those who had invested money in the land. With crude oil prices falling sharply in 2014, Cairn downsized its workforce and private businesses dwindled.
Political analysts point out that oil refinery is not the first project which is hanging on the mercy of change of guard in the state, but Barmer has faced instances of neglect in the past as well. One such example is of mega drinking water project, whose foundation was laid in 2003 in Congress tenure. Congress claimed Barmer Lift Canal would be completed in three years but Raje, who won the 2003 polls, put the project on hold. In 2007, Raje again laid down the foundation of the project, accusing the Gehlot government of not making budgetary allocations. In 2008, Congress formed the government, and finally, incomplete first phase of the Barmer Lift Canal project was inaugurated by the Congress president Sonia Gandhi, in August 2012.
After the new MoU, real estate brokers have become active again and people are hopeful that there’ll be surge in employment. This would be the country’s 25th refinery, and the neighbouring states will be major markets for petroleum products.