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GOS Issued to Give a String of Incentives to ‘Mega' Refineries

  • The State Government on Tuesday issued controversial orders granting a string of incentives to two oil refineries proposed in Petroleum, Chemicals and Petrochemical Investment Region (PCPIR) developed between Visakhapatnam and Kakinada.GO Ms. No. 7 mentions the incentives being given to Amerind Petroleum Pvt. Ltd. for relocating a closed oil refinery from the United States near Atchutapuram, about 50 km from Visakhapatnam.The company will relocate the machinery to launch 7.5 million tonne refining at a cost of Rs.2,500 crore in first phase. It will invest Rs.7,750 crore for adding another 7.5 million tonne in second phase along with a petrochemical complex. GO Ms. No. 6, also issued on the same day (i.e. 10.01.2012) grants the incentives to Al Qebla Al Waytya Inc. (A.K. Group), Kuwait for setting up a crude petroleum refinery. It sought 1200 acres near a deep water port for its proposed 4,00,000 bpd in two phases at a an investment of US$ 2 billion.

  • For the project by Amerind being a second-hand refinery benefits under Industrial Investment Promotion Policy (IIPP) 2010-15 will be offered by giving an exemption. Being second-hand unit, it is not entitled to mega project status as per GO Ms. No. 29.06.2010.“Even the second one -- Al Qebla Al Waytya Inc. has a tie up with Cals Refineries, which has experience in acquiring second-hand refineries. So I am convinced it will also relocate a second-hand refienry,” former Union Power Secretary E.A.S. Sarma told The Hindu.

  • The GO on Amerind clearly states that it is not eligible for incentives under the industrial policy for relocating second-hand machinery. However, it was given exemption and accorded mega project status.The GOs were issued based on the recommendation of State Investment Promotion Committee.The GOs give the Kuwaiti company 25 per cent VAT/CST and CST for five years, 45 per cent VAT and CST thereafter limited to two times the investment made by the company whichever is earlier. The company is eligible to VAT reimbursement only if the sale price of its product is same as the index price of Government of India. In case of disbanding of index price, market price as decided by the Commercial Taxes Department should be taken into account.

  • Amerind, as per the GO relevant to it, gets 100 per cent reimbursement of stamp duty and transfer duty paid by the industry on purchase of land meant for industry use, 25 per cent VAT/CST/State Government Sales Tax for five years from date of production and 50 per cent reimbursement on skill upgrading. Incentives listed in IIPP will be extended to both the projects.As per the AP Infrastructure Development Enabling Act, 2001, mega projects should follow competitive bidding. In the case of both, Amerind and the Kuwaiti company, the provisions in the Act were not followed.

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