New Delhi, Dec 01: The Orissa government has agreed to restore tax concessions to IOC's Paradip Refinery Project, paving the way for construction work to begin on the Rs 12,400 crore proposed refinery. "Orissa government has agreed to issue a notification restoring the tax concessions it had granted in August 1999," official sources said.

The state government will provide concessions in line with those offered by the Haryana government for Panipat Refinery, including deferring sales tax on refined products for 11 years and exempting crude oil from state entry tax.

Earlier, the state had agreed on a five-year exemption on entry tax, but IOC said that such a tax would result in negative refinery margin.

IOC will sign an MoU with Orissa government on year-wise physical and financial milestones for the refinery, the sources said.

The refinery's viability came under doubt in February 2000 when the state withdrew the incentives it had offered in August 1999. The incentives were partially restored in July 2001 but those amounted to merely 32 per cent of the original concessions.

IOC has, however, declined to advance refinery's commissioning to 2008-09, saying that it had already moved its implementation from 2011-12 to 2009-10.
Bureau Report