IOC seeks two-year extension of tax exemption for Paradip refinery

State-owned Indian Oil Corp. (IOC) has asked for a two-year extension of tax breaks given to refineries under section 801B(9) of the Income Tax Act. The act exempts refineries that are commissioned by March 31, 2012 from payment of income tax on revenues earned from refining crude oil during the first seven years of operation. IOC has asked for the extension so that its Rs29,777 crore (US$5.9 billion) refinery can avail of the tax exemption. The March 2012 deadline for the tax exemption was set based upon the commissioning schedule given by IOC for its Paradip refinery in Orissa. But construction of the 15 million ton-a-year refinery has been beset by law and order problems, as well as issues pertaining to land acquisition. The facility is now expected to be commissioned in September 2013. IOC’s request has been forwarded to the appropriate government ministries, but the seven-year income tax exemption for the refining industry will end next year. The Paradip unit is expected to produce 5.97 million tons (MT) of diesel fuel, 3.4 MT of petrol, 1.45 MT of kerosene/ATF, 536,000 tons of LPG, 124,000 tons of naphtha and 335,000 tons of sulphur. The company said it may also export some of the plant’s 200,000-ton propylene output. The Paradip refinery is being configured to process the toughest, heaviest and dirtiest crudes, which are cheaper than the cleaner and more easily processed varieties. IOC said the Paradip refinery will have a Nelson Complexity Index of 13, which would be the highest in the world. (December 1, 2011)