ONGC to review refinery expansion plans

New Delhi, Mar 6: State-run upstream major Oil and Natural Gas Corp will review its refinery expansion plans as the government proposes to end a tax holiday for projects coming up after April 2009.

''I have asked my group to work out the financials. We don't want to carry on with uncertainties,'' ONGC CMD R S Sharma told reporters here.

ONGC plans to set up two new refineries in the country, besides raising the capacity of its Mangalore refinery to 3,00,000 barrels per day (bpd).

He said the proposal would affect the Mangalore refinery's expansion plans and raised a 'big question mark' on its planned new units, which include 3,00,000 bpd unit at Kakinada in the east coast, and one in Rajasthan.

The budget proposal, awaiting legislative approval, seeks to end a seven-year tax holiday for refineries commissioned after April 1, 2009, and will affect all proposed new refineries.

Among the refineries which would be hit by the proposed change include Indian Oil Corp, Bharat Petroleum Corp, Essar Oil and the one planned by steel magnate Lakshmi Mittal in a tie-up with state-run Hindustan Petroleum Corp.

Mr Sharma said the new regulation would slow down the pace of refinery expansion in the country.

He added that the proposed law, if applied to exploration activities, will reduce rate of return from the projects, but hoped the tax benefits would be restored for future projects.

UNI