Policy on petroleum and chemical zone likely to come in a new avatar

In an effort to revive the Rs 8.87-trillion investment plan in the chemicals industry, the government will come out with a revised policy on petroleum, chemicals and petrochemical investment regions (PCPIR) in about four months.

Though the PCPIR in Dahej (Gujarat) is operational, others including Vishakhapatnam-Kakinada (Andhra Pradesh), Paradeep (Odisha) and Cuddalore and Nagapattinam (Tamil Nadu) are yet to take final shape. 

The department of chemicals and fertilisers had organised a meeting with industry stakeholders on Monday in this regard and a detailed policy revision is being worked out, possibly giving more autonomy to PCPIRs.

“The industry has given us certain suggestions. Once we are able to crystalise our thoughts, we will come out with a revised policy on PCPIR. It will take another four months. We are now planning four PCPIRs and once the policy is strengthened, we will look at additional projects,” P Raghavendra Rao, secretary, department of chemicals and petrochemicals, told Business Standard on the sidelines of a Confederation of Indian Industry (CII) summit in Delhi on Tuesday.

The four PCPIRs are expected to give employment to around 3.4 million people. Based on the existing policy, the Centre is responsible for infrastructure outside PCPIRs, while the state’s role is more inside the region.

“The government is very keen to reactivate PCPIRs. The country needs it and I believe that there should be a nodal agency for it at the state level,” said Kamal P Nanavaty, president, Chemicals and Petrochemicals Manufacturers’ Association (CPMA). 

Based on the plan, an investment to the tune of around Rs 43,700 crore is already committed through the PCPIR in Andhra Pradesh while the Paradeep project may see Rs 45,000 crore.

According to the revised estimates by the government, a total of Rs 8.87 trillion is expected to come up in the PPIR regions. This include Rs 1.737 trillion in Gujarat, Rs 3.43 trillion in Andhra Pradesh, Rs 2.78 trillion in Odisha and Rs 92,500 crore in Tamil Nadu. The government has set up steering committees to monitor the developments of PCPIR in various states. 

“We need a more autonomous PCPIR system where all the ministry people are co-located. All approvals can happen at a single window,” said R Mukundan, managing director and chief executive officer (MD & CEO), Tata Chemicals.

This would require an anchor for PCPIR. Many of the PCPIR projects, including the Vishakhapatnam-Kakinada one, were struggling to find anchor investors. 

Mukundan also batted for relaxation in the existing product flexibility norms to give a push to the industry. “Now, for even minor changes in product mix, we need clearances, which takes two to three years. We need a faster clearance for product flexibility,” Mukundan added. With changes in policy, the industry has a potential to grow at 12-15 per cent. 

The role of the Centre includes granting approval for establishment of PCPIRs, ensuring the availability of external physical infrastructure linkages to the PCPIR and supporting the state governments concerned in promoting domestic and global investment. On the other hand, the state has to play the lead role in setting up the PCPIR.

The Centre government had plans to come up with a PCPIR in West Bengal’s Haldia in 2009. However, this got dropped after the state government decided to develop an industrial park, power plant and an eco tourism unit in the same location.