AP takes back land for HPCL's Rs 45,000 cr complex

State cites delay in project execution, cancels allotment of 1,500 acres

In a setback to state-owned HPCL, the Andhra Pradesh government has cancelled the land allotted to the company for setting up its proposed Rs 45,000-crore petrochemical complex at Visakhapatnam, due to delay in executing the project, a government official has said.

Hindustan Petroleum Corporation Ltd (HPCL) was allotted 1,500 acres in 2007 for setting up the petrochemical complex in the proposed Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) coming up between Kakinada and Visakhapatnam on the east coast.

T S Appa Rao, Principal Secretary - Industries and Commerce Department, Government of Andhra Pradesh, said the government had returned the land deposit money given by HPCL.

"Even earlier also they indicated that they cannot go ahead with the project as they were not getting partners. They informed us they cannot take up the project on their own also. Orders have been issued cancelling the land allocation," Appa Rao told PTI.

HPCL earlier had said that it was scouting for partners for its proposed Rs 45,000-crore petrochemical complex and already in dialogue with potential partners, including some PSUs.

When contacted O Pradhan, Executive Director (PCPIR), HPCL said they are "still looking" for partners.

The government-owned oil company, as an anchor partner, planned to set up 15 million tonnes per annum (mtpa) petrochemical complex with an estimated investment of Rs 45,000 crore at Visakhapatnam where the company already has a refinery with 8.5 mtpa capacity.

The proposed complex, among other units, would have aromatics and olefin plants to produce value-added products, a HPCL senior official had said.

The latest development may affect the whole PCPIR project as, even five years after the notification has issued, no state-owned oil company has come forward to become an anchor partner for the project.

Earlier ONGC had come forward to set up refinery. However it later withdrew its proposal.

Appa Rao said, the state government is in discussions with a Saudi-based oil company for setting up shop in the PCPIR.

"We have already tied up with Watya India Consortium, a Kuwait-based Al Qebla Al Watya Inc�s group company for establishment of a Refinery Project in PCPIR. A team of officials will be visiting Kuwait soon to fine tune details.

"A Saudi-based company has also evinced interest. Any one of these two can be an anchor unit in the PCPIR," he said.

The Kuwaiti company proposes to establish 400,000 barrels per day (bpd) refinery project in Andhra Pradesh in phases. Phase-I will be 100,000 bpd with a project cost of about $2 billion.

The state government has agreed to grant the incentives to the Petroleum Refinery Project, which qualifies as a Mega Project subject to eligibility and entitlement to all the benefits as given in the Andhra Pradesh Industrial Investment Promotion Policy, 2010-15.