In a major boost for investment in the petrochemical sector, the Ministry of Chemicals and Fertilisers has approved a proposal of investments worth Rs 1,54,512 crore in three regions under its flagship petroleum chemicals and petrochemicals investment regions (PCPIR) policy.

Under the policy launched in 2007, this is the first status report on committed investments approved by an inter-ministerial high-powered committee last week. The investment includes Rs 44,812 crore for physical infrastructure development, and the rest is project-specific investments committed by various public and private companies in three PCPIRs — Visakhapatnam and East Godavari districts in Andhra Pradesh, Bharuch in Gujarat and East Midnapore in West Bengal. Investments in physical investments include a viability gap funding (VGF) by the finance ministry to the extent of 20 per cent in each PCPIR except for West Bengal. The VGF scheme provides financial support in the form of grants, one time or deferred, to infrastructure projects undertaken through public-private partnerships with a view to make them commercially viable.

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The ministry has also taken the initiative of organising major trade fairs in Europe and Latin American countries like Brazil, Argentina and Mexico to attract foreign investment sector.

“The priority for this sector is to increase capacity so that the growing demand is met with domestic output,” said an official.

The Visakhapatnam and East Godavari PCPIR has received investment commitment of around Rs 73,000 crore through its main or “anchor” investors — a consortium of Hindustan Petroleum Corporation Ltd and GMR. The state government has committed Rs 2,132 crore for developing physical infrastructure followed by Rs 10,565 crore from private parties and another Rs 6,334 crore through public-private partnership. Besides the anchor investors, various companies with committed investments are ONGC (oil and gas exploration in KG basin), Rain Commodities, Continental Carbon India Ltd, Indian Strategic Petroleum Reserve Ltd, Velankani Chemicals, Air Liquide India, Southern Online Biotechnologies, Reliance Industries Ltd, Bharat Petroleum Corporation Ltd, Hetero Drugs, Baker Hughes, Gangavaram Port Ltd, Visakhapatnam Port Trust, National Thermal Power Corporation, Hinduja Power Project and Kakinada SEZ.

Similarly, the Bharuch PCPIR in Gujarat with its main anchor investor, ONGC Petro Additionals Ltd (OPAL) — a joint venture of ONGC and Gujarat State Petroleum Corporation — has committed project investment of Rs 16,400 crore. The investments are for the Rs 13,000-crore multi-feed petrochemical cracker and Rs 3,400-crore carbon extraction unit. Investment in infrastructure is a combination of state government budgetary support of Rs 253 crore and public-private partnership of Rs 51,496 crore, which includes commitments of state government and private developers. Various companies which have committed investments are ONGC extraction plant, ABG Shipyard, Ruchi Petrochemicals, Gujarat Alkalies and Chemicals Ltd, DIC Fine Chemicals, Sajjan Speciality, Pidilite Industries, Rallis India, Lanxess India, Ginni Filament, Arcoy Biorefinery, Romano Tiles, India Peroxide and Neesa Infrastructure. The report has also stated that the total employment generation from the Gujarat PCPIR is expected to be 800,000.

Indian Oil Corporation (IOC) is the anchor investor in the West Bengal PCPIR with a committed investment of Rs 3,000 crore for expansion of its refinery and a new hydro cracker unit, Rs 1,800 crore for a coker unit and Rs 4,000 crore for a new paraxylene unit. The Spic group-controlled CALS refinery has proposed to set up a Rs 5,000-crore crude refinery complex for blending crude which is expected to be commissioned by the end of 2010. There are also grassroot refineries proposed by IOC and CALS, which will take the total investment to Rs 93,180 crore. For physical infrastructure, the Union government has also earmarked Rs 2,108 crore in its current five-year plan. The remaining Rs 15,923 crore has been committed through the state government jointly with public-private partnerships.

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