Refinery A Political Pendulum

Pime Minister Narendra Modi along with Union minister for road transport and highways Nitin Gadkari inaugurated highway and road projects worth Rs 15,000 crore in Rajasthan from Udaipur on August 29. But Modi did not do so for the much talked-about project in Rajasthan which is the crude oil refinery. It was a symbolic stone-laying ceremony which does not require much preparation and the basic requirement for this is the land which is there already in the possession of the joint venture company formed between Rajasthan government and HPCL to implement the refinery. Modi did not speak about the project either. How can a prime minister who is coming to the state to inaugurate infrastructure projects and not mention about the most important project of the state? It may look baffling but Modi has already said that he inaugurates the projects that are going to be completed. In that sense, refinery is unlikely to see light of the day and there is nothing more to the project than politics.

Recently, Modi visited Varanasi where he said that he lays foundation stones of the projects which are real and will be completed. He inaugurated 17 infrastructure projects and a small finance bank and said he not only lays foundation but also inaugurates projects.

Even though the state government could not keep the refinery project on Modi’s agenda in Udaipur, it could have convinced him to lay the foundation in a future date. Sources said the government including the chief minister has tried to secure his presence for the occasion but Modi has not confirmed his participation so far.

This is a potential pointer to the harsh reality that refinery is a political project played by both Congress and BJP. Like the previous Congress government which branded the project as the pride of the state just before the assembly elections in 2013, the current BJP government is also treading a similar path.

After coming to power in December 2013, chief minister Vasundhara Raje scrapped the MoU with HPCL signed by Congress government saying that the deal was in favour of the company. She had said that the state government was to get only 26% stake in the project despite giving land and viability gap funding of Rs 3700 crore every year for 15 years which made the deal one-sided in favour of HPCL.

She not only scrapped the MoU but took more than three and half years to sign another revised MoU which brought down the viability gap funding by the state government to Rs 1100 crore even though the stake remained at 26%. After signing the MoU in April this year, she claimed that the state gained Rs 40000 crore from the deal.

Signing the deal just before the assembly elections did gave birth to speculation that the current government is also following a similar path to corner electoral gains. If one speaks privately to people in the government, the message is that the government is ready to waste a few crores to start some work on the ground just to give the impression that it is committed to the project. But they said the reality is different and the project will not beraing fruit.

Media reports from the villages where the proposed refinery is proposed to come up suggest that the local people are also not convinced of the project.

When the MoU was signed in 2013, land prices in Pachpadra shot up dramatically. People then believed that the refinery project was not a political hoax. But, when in April 2017, the revised MoU was signed between the state government and HPCL in the presence of Union petroleum minister Dharmendra Pradhan and chief minister Vasundhara Raje, there was virtually no impact on the ground as people believed it was politically motivated. Accordingly, there was no interest among the investors to come and buy land.

But since the state government does not want to lose any political windfall, it is taking all efforts to convey the message that the refinery will be a reality and it is committed to the project.

The joint venture company HPCL Rajasthan Refinery Ltd (HRRL) formed to implement the project has been given a new lease of life. In its 19th board meeting held on October 6th, 2017, a decision was taken for an equity infusion of Rs 170 crore. This is first such funding for the project and it indicates that the government is serious about the project. Rajasthan government will contribute Rs 44 crore in proportion to its 26% stake holding in the joint venture company. HPCL which holds 76% stake will infuse Rs 126 crore.

HRRL’s project consultant Engineers India Ltd has already awarded a contract to build boundary wall for the refinery. To bring water and make electricity available, some planning has already been done. Even after all the efforts, there is still disbelief about the project.

State assembly elections are going to happen in about a year. People believe that the state government can waste a few crores to create a positive sentiment about the project. But in the end, it will not take up the project as it is still not commercially viable. Only time will tell about the future of the mega project in the state but going by the sentiment of the people it look unlikely that the refinery will ever be built. Such high profile industrial projects announced prior to the election time hardly take off. For example, the 4000 megawatt solar project at Sambhar announced by the then Prime Minister Manmohan Singh met a similar fate. There is plethora of such instances where the projects did not see light of the day.