The Gehlot-led Congress government during its reign from 2008 to 2013 promised a basket full of ‘free’ goodies to Rajasthan. With the aim to strengthen its vote banks, the former government offered last-minute schemes during election year, such as pension, subsidized food grains and free medicines, none of which were implemented properly. Kishangarh airport, Jaipur Metro, Memo coach factory at Bheelwada and Barmer Refiner were four mega-projects announced by Congress in its election year. Out of these, the Barmer refinery project was a matter of intense discussion for both the governments.
In March 2013, under the leadership of Congress Vice President Sonia Gandhi, former CM Ashok Gehlot signed a joint MoU with HPCL (Hindustan Petroleum Corporation Ltd) worth Rs 372.1 billion, thus promising a refinery at Barmer border in Pachpadra. They claimed it would add value to gas and oil reserves present in Thar. This advancement in petro-chemical sector would provide jobs to 4 lakh people in future.
In December 2013, when BJP government took over, the public expected Raje to pursue this project with equal zeal as Congress. Things changed when a review committee was set up by state government to review the progress of Gehlot’s schemes. The reviewing committee found that the ambitious Barmer refinery was nothing, but a multi-million scam—reflecting dubious intentions of Congress government.
The MoU signed between Congress and HPCL had Dicey Terms & Conditions
The inquiry report of the committee states that Congress signed an MoU with HPCL to set up a refinery with 9-million tonne oil capacity. The initial terms of the contract stated the Rajasthan government will provide Rs. 3736 crores/year as interest-free loan to HPCL for 15 years. It’s not the loan, but the T&C of contract that shocked them. Regardless of state DISCOMs struggling with a momentous debt worth 80,000 crores, Congress promised a loan worth Rs 560 billion to the joint venture company.
Following the commencement of commercial production in refinery, the joint venture companies were expected to make profits worth Rs 680 billion. However, the Congress government demanded a share of measly 26% in their annual profit. Thus, Barmer refinery scam was one of the biggest scams conducted by Rajasthan government.
Why Rajasthan Didn’t Benefit from the Contract?
Raje pointed out that the state had agreed to give its land and natural resources. Besides, the HPCL was planning to use crude oil from Cairn. In case it fell short, they would import it from South America and Gulf—a venture that was supported by Congress. In short, Congress would bear the burden of crude oil purchase. Considering this, a share of 26% profit seemed impractical. The concessions on refinery included 50% exemption on excise duty.
Raje Cited the Example of Bhatinda Refinery saying Barmer Needs Something Along the Same Lines
The Bhatinda refinery is a joint-venture of Punjab government, HPCL and the Mittal group. It was approved under the reign of former PM Mr. Atal Bihari Vajpayee. The profits made from the refinery were split between the joint stakeholders, with Punjab getting 49% share in profits. Besides, the government charged HPCL for individual resources and services including land, canal water, roads and other services.
Cairn India, which holds 70% stake on Rajasthan’s fields currently produces 8.75 million tonnes oil per year. The potential is expected to increase to 15 million tonnes in the coming year. In this situation, the Barmer refinery seems not just expensive but unrequited.
But since the people were interested in the refinery, the CM had multiple meetings with HPCL chief secretary Rajiv Maharishi and Chairperson Nishi Vasudev to negotiate over the loan amount & clauses of the contract. The officers argued with HPCL board to bring down its IRR (Internal Rate of Return) from 15% to 12%.
Currently, the government is in process of revising the conditions of the MoU. If the company doesn’t agree to the conditions set by the government, it’s best to drop Barmer refinery for a while until economic conditions improve in Rajasthan. As it is every newborn in Rajasthan bears a debt of Rs 30,000 on its head. Pursuing with Barmer project will just worsen the existing situations.
