The government’s euphoria over striking investment proposals worth Rs 6.48 lakh crore at the Partnership Summit held in January this year proved short-lived with no big-ticket investment seen going forward even four months after signing the MoUs.
“The companies that have proposed big-ticket investments appear to have taken a wait-and-watch approach to see some clarity on how the future politics would shape up in the state before initiating further steps,” a senior government official, requesting not to be named, told Business Standard.
For instance, Kuwait-based Al Qebla Al Watya Inc singed an MoU with the Andhra Pradesh government in December last year to set up an oil refinery project in Visakhapatnam with an initial capacity of 100,000 barrels per day (bpd) with an investment of $2 billion, with an add-on plan to double the capacity in the next phase. Though the government has allocated 1,200 acre for the project, the company is yet to take possession of the same.
“The company officials had informed the government that they would make only some initial payment towards the land cost and the rest after receiving all the approvals,” a source in the industry department said. Interestingly, the State Investment Promotion Board (SIPB), headed by the chief minister, had already cleared the project with all the incentives sought by the company in January itself.
Referring to the fact that the company needs to shell out over Rs 450 crore just for the land, sources observed that either the company considered it is too risky to commit that much amount up front or it felt too early to get huge sum stuck in a dead asset.
While the Kuwait project is one of the 20-odd investment proposals worth over Rs 70,000 crore that had been cleared by the state government ahead of the Partnership Summit, about 25 industrial investment proposals, or half of those received during the summit, have now been lined up for clearance by the State Investment Promotion Committee (SIPC).
Interestingly, none of these 25 proposals fall into the big-ticket category, according to the officials. As no active persuasion of their proposals is coming from the big-ticket investors, the industry department officials now feel that it would be better to focus on medium-size projects to get some results on the ground for the time being.
The same is the case with Indian companies such as the GMR Group that had proposed an over Rs 33,000-crore refinery project at the 10,000-acre Kakinada SEZ which it owns. Though they signed a fresh MoU with the state government for the project at the summit, the company, however, maintained that it was yet to find a strategic partner to move ahead with the project.
Now, the farmers are not allowing the developers to lay even approach roads to the SEZ lands, making matters further difficult for GMR, said an official.
“It is curious to see as to why the company is taking so long even after acquiring the SEZ project in 2008 itself for this purpose. We know that they have an overseas partnership with Malaysian oil and gas company Petronas. There is no reason why they should not rope it in for their domestic venture,” a senior industry department official said.
In a recent twist, opposition leader N Chandrababu Naidu chose Kakinada SEZ lands to protest against acquisition of farm lands, turning it into a controversial venture. Officials are clueless over Naidu's choice as the promoters of the Kakinada Seaports Limited, which was given the government-funded Kakinada seaport when he was the chief minister, also hold a minority equity in the SEZ project.
And, the GMR Group shot to national fame only after it had emerged as the successful bidder for the Hyderabad international airport project under Naidu's government and executed it.
Of the Rs 6.78 lakh-crore investment proposals, Rs 2.23 lakh crore was received in the industrial sector, while the energy sector accounted for about Rs 3 lakh crore. Barring a few, many of these power projects are also expected to take a much longer time in the wake of the ongoing uncertainty over natural gas and coal supplies.
On the mid-size investments front, most of the cement projects that figured in the summit are also going nowhere as the state government is yet to grant lime stone mining leases to the project developers. However, the industry department is hopeful of seeing progress in other industrial investments in the manufacturing sector, citing Proctor and Gamble (P&G)’s recent announcement about its Hyderabad plans.
P&G is proposing to invest Rs 450 crore to set up its largest manufacturing plant in India at Hyderabad and make it a hub for the entire south Indian market, according to the officials. When contacted, a P&G official remained noncommittal over the size of the investment, though the officials maintained that the company had much bigger plans beyond the initial investments here.
Meanwhile, a delegation of senior government officials is planning to make an overseas visit to meet the Sultan of Abu Dhabi next week, following a meeting by the representatives of that country with the chief minister during the Partnership Summit. They, too, expressed keenness on investing in a refinery among other projects in the state.
