Proposed investments put on ice amid weak demand

Proposed investments in the industrial polymer and petrochemical sector are on hold due to weak demand, in both domestic and foreign markets.

Official sources said anchor investors in the petroleum, chemicals and petrochemical investment regions (PCPIRs) had decided to put their investments on hold for the time being. Many investors are in talks with the government for restructuring the PCPIR scheme in the 12th Plan period.

The department of chemicals and petrochemicals also cancelled various logistics bids for the newly-floated plastic park scheme due to unavailability of right bids, according to the sources.

“The demand push for polymers is yet to surface in a big way in India. Even if one manufactures for exports, the time is not conducive,” industry sources said. The Planning Commission has already asked the department for consolidating the schemes for plan allocation. Thus, all schemes were under review, said an official.

The PCPIR scheme is aimed at promoting investment in the chemical and petrochemical sector to make India a hub for domestic and international markets. The plastic park scheme proposes to organise all plastic manufacturing industries under one umbrella in various states, primarily to check effluent management.

According to plastic processors interested in setting up such parks, the guidelines are vague and procedures for getting approvals are cumbersome.

The PCPIR scheme has till date received approved investments worth Rs 1,54,512 crore in three states — Gujarat, Andhra Pradesh and West Bengal. A consortium of Hindustan Petroleum Corporation Ltd and GMR has committed to invest Rs 73,000 crore

in the Visakhapatnam and East Godavari PCPIR in Andhra Pradesh.

The Bharuch PCPIR in Gujarat with its main anchor investor, ONGC Petro Additionals Ltd (OPAL), has committed project investment of Rs 16,400 crore. OAPL is a joint venture of ONGC and Gujarat State Petroleum Corporation.

Indian Oil Corporation 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.