Prime Minister Manmohan Singh has asked Petroleum Ministry and ONGC to re-examine possibility of

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setting up a refinery at Barmer district in Rajasthan to process the crude discovered by Cairn India in the state.

Rajasthan Chief Minister Ashok Gehlot, who had last raised the demand for setting up a refinery in the Thar desert in the presence of UPA chairperson Sonia Gandhi in February, today again raised the demand when PM came here to inaugurate the oil find from the Cairn field.

"The Prime Minister has instructed the case to be re-examined, so we will give it a serious thought and will come back to you," Petroleum Minister Murli Deora said at the function.

Gehlot said that it was the aspiration of the people of Rajasthan that a refinery is set up here and the pipeline built to transport Cairn India crude to Gujarat coast used for additional importing oil to be processed at the unit.

ONGC Chairman R S Sharma, however, said the viability of the refinery depends on fiscal incentives like exemption from sales tax, free land water and power and other sops from the state government.

ONGC had examine the viability of 7.5 million tonnes a year refinery but found the rate of return on capital at just 1.5 per cent without the fiscal incentives.