State-owned Indian Oil (IOC) is set to invest around Rs520bn ($8.1bn) to expand the Paradip refinery and establish a petrochemical complex in the Indian state of Odisha, according to the Press Trust of India.
The development comes after the Odisha Government committed to restoring part of the tax incentives.
A previously announced incentive package announced by the government gave IOC the right to defer payment of sales tax by 11 years on Paradip refinery products sold in the state.
However, the tax benefits were later withdrawn in February this year, following which the oil company moved the Odisha High Court that was protesting against the decision.
Under the current deal, the state government has agreed to allocate an interest-free loan of Rs7bn ($109.05m) per annum for a period of 15 years.
An unnamed source was quoted by the news agency as saying: "IOC wanted Rs10bn ($155m) per annum of the interest-free loan but in the end settled for a Rs7bn ($109.07m) loan over a longer 15-year period.”
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By GlobalDataThe company will now expand the refining capacity at its Paradip facility by five million tonnes per annum.
IOC needs to deposit applicable value added tax (VAT) or goods and services tax (GST) on products sold, while the repayment of the loan will start every 16th year for each instalment.
VAT that was collected and not paid for the years 2015-16, 2016-17 and 2017-18 has to be deposited by IOC immediately, the news agency reported.
