Hydrocarbon Vision 2030 (ஹைட்ரோகார்பன் தொலைநோக்கு ஆவணம் 2030)

7.5.1.3 Refining margins
VAT and entry tax: In June 2011, the government reduced customs duty on crude oil, MS and HSD by
5%. Following this change, northeast refineries are at a disadvantage vis-à-vis refineries processing
imported crude oil as they have to pay VAT at 5% and entry tax at 2%. Refineries processing imported
crude oil do not have to bear any tax as the incidence of customs duty/sales tax is nil. Therefore, the
central and state governments need to take appropriate steps to reduce VAT or entry tax so that the
refining margins of NER refineries do not suffer.
Stream exchange: To facilitate the sharing of intermediate products within four refineries (to optimise
cost and improve product yield), suitable tax exemption may be provided at the first point even for
those categories of sale where goods are used by the buyer for further processing. This can be done
by incorporating a clarification to the effect that VAT is not applicable for exchange/sale of any
intermediaries to be used as raw material to produce finished petroleum products. Such an exemption
also needs to be extended to entry tax and all other local levies, which otherwise also is paid at the
time of sourcing of raw material by the dispatching companies. Alternatively, the tax on input may also
be permitted to be set off against tax on output.
7.5.2 Increasing availability of POL products
7.5.2.1 Develop new market for POL products
Surplus petroleum products generated by the region’s refineries can primarily be exported to
Bangladesh and Myanmar subject to pricing considerations, while some of it can be utilized for
production of petrochemical grade naphtha for which adequate demand exists within the country.
Therefore, steps needs to be taken to create pipeline infrastructure in collaboration with neighbouring
countries.
7.5.2.2 Increase production of LPG
The refineries in the Northeast India do not have sufficient LPG production capacity to meet the LPG
demand of the region. Therefore, the refineries must look to increase LPG production capacity by
introducing new technology or with further capacity addition.
To increase LPG production, IOCL has commissioned an Indmax unit (a technology developed by
IOCL’s R&D centre for upgrading heavy ends to LPG gasoline and diesel), at the Guwahati refinery in
June 2003. Such technologies can be shared with other refineries so that production of LPG can be
enhanced.
7.5.2.3 Increase LPG penetration
LPG penetration is the lowest in the Northeast among all areas. Therefore, concerted efforts need to
be taken by all the stakeholders to increase LPG penetration in the region. IOCL proposes to lay an
LPG pipeline, which will connect Numaligarh refinery (in Assam) with Imphal to address the supply
scenario in remote areas in NER. This pipeline connectivity is expected to ensure uninterrupted
supply, which, in turn will also reduce dependence on road for LPG transportation.
Proposed strategies for meeting LPG demand by OMCs
In order to ensure higher LPG penetration by 2018, immediate focus on Assam, Manipur, Meghalaya
and Tripura is required. Moreover, to strengthen the bottling infrastrucuture so as to achieve the
targeted LPG penetration, the following requirements have been identified:
Capacity Augmentation at LPG bottling plant at NRL: This is expected to be completed by
March/ June 2017. After the augmentation, the capacity will be 30 TMT in sigle shift. In the
meantime, NRL is planning to operate the existing plant in two shifts.
BPCL has identified Tezpur, Assam to set up a LPG bottling plant of 30 TMT capacities in single
shift and a proposal for procuring land from Assam industrial development corporation limited is
underway. This plant is expected to be commissioned by March, 2019. The proposed plant will
be with LPG storage for bulk and packed stock. Initailly, it is proposed to put up bulk storage of
900 MT.
Further, BPCL along with other OMCs is expected to set up new distributorship in the region,
which is likely to ensure LPG access to more numner of households
150