CASE STUDY

Topics: Petroleum, Rajasthan, Oil refinery Pages: 7 (1485 words) Published: May 12, 2014
International School

Of

Business

Management, Suresh Gyan Vihar

University, Jaipur

2013

Economics of the Barmer Refinery
Author - Dr. Ruchi Goyal, Associate professor, ISBM
Dr. Trilok Kumar Jain, Dean, ISBM
Large projects have many plus and minus points. Investing in large projects involves huge outflow of resources. These projects also have many un-wanted side effects on people living in neighboring areas. These projects also change the aspirations and consumption habits of people in the nearby areas, thereby changing their living standards. Large projects also affect the local ecology, traditions, rituals, practices and in a way the entire life style. Hence, there is a need of proper planning for setting up large projects. Western Rajasthan, is facing years of drought and famine, Barmer one of the largest districts of the state of Rajasthan in India is largely arid and forms a part of Thar Desert. Its total area is 28,387 Sq. kms. Barmer had a population of 19,64,835 in 2001. The district has 3.48 percent of state’s population and 8.29 percent area. Agriculture, which is the prime occupation of rural India, is an unattractive proposition here due to the frequency of droughts, the inhospitable terrain and the lack of irrigation facilities that plague the area. With a few industries around, the only source of income seems to be animal husbandry, the traditional craft of patchwork and mirror embroidery. It is one of the twelve districts in Rajasthan currently receiving funds from the Backward Regions Grant Fund Programme (BRGF).

In the recent times, Barmer has observed a structural change in its economy as depicted by district income estimates at current prices. Total income generated in 1999-2000 was Rs.165071 lakh, which increased to Rs. 259338 lakh in 2004-05; a 1.57 time increase. Simultaneously, the contribution of agriculture and allied sectors declined from 38.4 percent to 32.3 percent from 1999-00 to 2004-05. There is an increase in contribution of mining and manufacturing sector from 20.5 percent to 24.0 percent during this period. The contribution of service / tertiary sector improved from 41.2 percent to 43.8 percent. Construction sector has improved its contribution and in 2004-05 contributed 10.1 percent in the district’s income. The major activity in service sector is trade, hotel and restaurants (14.4%) and is followed by real estate activities (7.92%) and other services (7.175 %). Transport, banking, railways, communication and public administration have gained in their shares in district income during the aforesaid period. With the setting up of Oil refinery in Barmer the land will be oozing black gold, the picture will change and the state will develop, thus Barmer will put the foundation for the making of a new Dr. T.K. Jain (Dean, ISBM); Dr. Ruchi Goyal (Associate Professor,ISBM)

Page 1

International School

Of

Business

Management, Suresh Gyan Vihar

University, Jaipur

2013

Rajasthan.
Hindustan Petroleum Corp Ltd (HPCL) will set up Rs 37,320-crore oil refinery and petrochemical complex in Barmer in Rajasthan. HPCL will hold 74 per cent stake in the nine million tonne a year refinery with Government of Rajasthan taking 26 per cent. The unit is planned to go on stream in four years.

The refinery, which will fulfill nearly a decade-old demand of the state, will run on crude oil from neighboring oilfields of Cairn India. Half of the crude oil requirement at the proposed refinery will come from the Barmer oilfields of Cairn and the rest will be imported. Besides taking 26 per cent stake, the state government has given in-principle approval for providing an interest free loan of Rs 3,736 crore per annum for 15 years from the date of commercial production.

The state government has also assured continuous supply of 28 MGD of water for the project from Indira Gandhi canal and about 3,500 acres of land for refinery, terminal and township near Leelala area in Barmer....
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