New Delhi: The Union government on Monday offered a seven-year tax holiday for new private refineries that start operations by 31 March 2012, bringing them on par with state firms, the budget document showed.
Last year, the government had set the deadline for private-sector companies to avail the benefit as March 2009.
“The notice given to private sector entrepreneurs to complete the execution of their refinery project was extremely short,” the government said in its budget.
“As a result, entrepreneurs who had undertaken substantial investment in anticipation of the tax holiday suffered serious financial setback.”
Essar Oil, which runs a refinery in western Gujarat state that can process 280,000 barrels of crude per day, will be one of the biggest beneficiary of relaxation. The firm aims to ramp up the capacity to 680,000 bpd by December 2011.
“(This) is a welcome move and will help the flow of investments in this sector,” said Naresh Nayyar, managing director of Essar.
He also said: “The proposal to set up an expert panel for petroleum product pricing will bring in the much awaited level playing field for the private sector and will thereby benefit the consumer since there will be enhanced competition in this sector.”
India has 3.56 million barrels per day (bpd) refining capacity and it plans to raise it to 4.2 million bpd by March 2012.