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Social and economic impact analysis of Vadinar refinery of Essar oil: The Case of a mega refinery

Author

Listed:
  • Sumana Chaudhuri

    (Durgadevi Saraf Institute of Management Studies)

  • Shovan Ray

    () (Indira Gandhi Institute of Development Research)

Abstract

The paper is a case study of Vadinar refinery in Gujarat. It examines the costs and benefits associated with one of the world's mega refinery projects highlighting the welfare impacts on society. The paper briefly examines whether refining at Vadinar by Essar is of net economic benefit to the region, state and the country by constructing a Social Cost Benefit Analysis of the Vadinar Refinery Project. The paper analyses the local-level economic impacts (on-site labor impacts, local revenue and supply chain impacts and induced impacts) and jobs supported by Vadinar refinery construction and ongoing operations. The paper also analyses the regional (state and country) level economic impacts; multiplier effect of income, tax and savings generated as a result of the refinery operations, including other externalities associated with the project. There is abundance of scope to reflect the strategic food and oil security of India from the macroeconomic perspective; the gradual increase in investor and consumer confidence with respect to self-reliance in production and consumption of oil and natural gas resources in the country and the broader social impact of the project, which may be taken up in subsequent research. A sequel to this paper will explore an approach to integrating the methods with a CGE model framework.

Suggested Citation

  • Sumana Chaudhuri & Shovan Ray, 2016. "Social and economic impact analysis of Vadinar refinery of Essar oil: The Case of a mega refinery," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2016-011, Indira Gandhi Institute of Development Research, Mumbai, India.
  • Handle: RePEc:ind:igiwpp:2016-011
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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2016-011.pdf
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    Keywords

    Social Cost Benefit Analysis; Economic Impact; Externalities; Oil Refinery;

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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