The department of petrochemicals at the Centre has started a review of its flagship scheme, the Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR).
Officials said the ministry aimed at creating a window for government funding support and had proposed this to the Planning Commission. It is evaluating the scope of budgetary funding into these projects, apart from the specified mode of VGF (viability gap funding and through public private partnership (PPP).
A committee of the ministry has proposed government grants in the form of gross budgetary support or tax breaks for investors coming into the zone. PCPIR is the flagship scheme of the ministry of chemicals and fertilisers, with approved investments worth Rs 1,54,512 crore in Gujarat, Andhra Pradesh, West Bengal, Orissa and Tamil Nadu.
Under the extant project guidelines, there is no budgetary support and the entire funding is to be done by the participants, which includes a government petrochemical public sector undertaking (PSU) as anchor investor. The VGF scheme provides financial support in the form of grants, one-time or deferred, to infrastructure projects undertaken through PPPs.
The review follows sluggish growth in the projected investment inflow into the various projects of the PCPIR zones approved across India. The ministry met state government reprentatives and have asked for inputs to modify the scheme so as to attract investment in the PCPIR zones.
Officials said a major reason for the slow inflow was recession in various parts of the world. Various state governments extended infrastructure support but very few have offered tangible funding help, apart from Gujarat, till date. Gujarat has notified the PCPIR under the rules for special investment zones and thus extended several tax-related advantages to incoming investors into its Bharuch PCPIR.
The ministry has also taken the initiative of organising major trade fairs in Europe and Latin American countries such as Brazil, Argentina and Mexico to attract foreign investment.
Till date, the Bharuch PCPIR in Gujarat has received Rs 70,000 crore of investments and the state government has completed 60-70 per cent of land development. Petronet LNG is setting up a 1,200 Mw power plant. ONGC Petro Additionals Ltd, a joint venture of ONGC and Gujarat State Petroleum Corporation, is the main anchor investor, with committed project investment of Rs 16,400 crore.
The investments are for a Rs 13,000-crore multi-feed petrochemical cracker and Rs 3,400-crore carbon extraction unit.
The newly approved PCPIR for Tamil Nadu, at Cuddalore and Nagapattinam, has received government support of Rs 5,120 crore. This will be part of investments in external infrastructure of Rs 13,800 crore, over and above an estimated investment of Rs 99,750 crore.The Visakhapatnam and East Godavari PCPIR in Andhra Pradesh has attracted additional investment of Rs 9,600 crore, apart from investment commitment of Rs 73,000 crore through its main or anchor investors — a consortium of Hindustan Petroleum Corporation 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 PPP.
Similarly, for the newly approved Orissa PCPIR at Paradeep, the anchor investor, Indian Oil Corporation, is setting up a 15-million tonne per annum refinery, likely to be commissioned in March 2012, at a cost of Rs 29,777 crore. The PCPIR is expected to attract total investment of Rs 2,77,734 crore.
