OREANDA-NEWS. September 2, 2011. The Indian Oil Corporation's (IOC) refineries in the state may suffer losses because of the recent change in duty fee by the Assam government that may cost them a loss of Rs 1900 crore a year from now on.

The refineries are already bearing the burden of additional sales tax (VAT) on crude oil after the state government hiked it from four to five per cent from June this year. On Wednesday, the United Workmen Union, Guwahati Refinery, slammed the government's decision of additional taxation and said if it is not revoked soon then the struggling refineries would face an adverse situation.

"While the Centre has restructured the duty fee by reducing customs duty on crude oil from five per cent to nil, the Assam government's decision to hike sales tax from four per cent to five and additional entry tax of two per cent is ridiculous," said Biren Kalita, the president of the union.

According to a study of the union, the four refineries will lose Rs 1891 crores in the coming fiscal because of extra entry tax and VAT. While Numaligarh Refinery will lose around Rs 765 crore, Digboi Refinery will suffer a loss of almost Rs 200 crore.

The union accused both the Centre and the state of turning a blind eye to business possibilities of the four refineries of the state. "The Digboi Refinery is the country's oldest whereas the one in Guwahati was the first public sector refinery of IOC. But the future of the oil sector looks blur with no plan of increasing their production," added Kalita.

The Guwahati Refinery has a production capacity of only 1.0 million metric tones per annum while the one at Digboi has a capacity of only 0.65 MMT annually. All refineries of IOC have not increased their production capacity since inception. "The neighbouring countries have no petrol refineries and the government should use this advantage. Rather concentrating on possible business opportunities, the new taxation is hampering the industry. If this continues, the refineries will soon shut down," said Kalita.

The union announced to organize a 24-hour token strike to press their demand and appealed to people to revive the oil sector. "Assam got the refineries after a long fight and now it's the responsibility of the people to keep them alive," he said.