Punjab, Centre in concession war

‘‘It would be appropriate if the Centre partly compensates us for this disadvantage by bearing the financial burden of making the refinery viable from its own revenue, instead of asking us to do so from our limited resources,’’ Singh wrote to Petroleum Minister Mani Shankar Aiyar.

‘‘If Bhatinda Refinery is denied to Punjab on account of inability of the state government to give concessions, it would further strengthen the perception that some people in Punjab have about discriminatory approach of the Centre towards Punjab,’’ he added.

The refinery project has been held up as the implementing agency — Hindustan Petroleum (HPCL) — insists the refinery would not be viable if the sales tax due for 15 years is not deferred. Before starting work on the project, HPCL wants a deed of assurance from Punjab on the concessions.

Singh’s argument is that the state’s tax realisation from sale of petro-products would not go up when the refinery goes onstream. Instead, the refinery’s products would displace those of other companies that pay tax.

‘‘Deferment of tax demanded by HPCL doesn’t amount to postponement of additional revenue; it amounts to loss of revenue being received at present. Our tax revenue will fall by Rs 600 crore per year once the refinery is commissioned. We cannot afford this loss,’’ said Singh in his letter.

Singh says viability can be achieved if the Centre forgoes part of its annual customs and excise duty collections estimated at Rs 1,000 crores. ‘‘If the Centre gave some relief to the refinery from its own taxes, it would not face any reduction of present revenue,’’ he said.

Singh said his state would have no hesitation in giving the assurance if it meant postponement of tax revenue.