14 September 2012 13:25 [Source: ICIS news]
KOLKATA (ICIS)--The Indian government is seeking private sector investors to help fund the construction of naphtha cracker units at several petrochemical enterprise zones across the country, an official at the Ministry of Chemicals and Fertilizers said on Friday.
The department has drafted policy measures for investors in downstream sectors such as petrochemical distribution to also invest equity in crackers at the Petroleum, Chemical and Petrochemical Investment Regions (PCPIRs) currently under development.
“It has been proposed that downstream companies should participate in the equity funding of cracker projects at PCPIRs, instead of government-owned petroleum and petrochemical companies being the sole lead investor,” the department official said.
“Replacing a product purchase relationship between the cracker project and downstream investor with equity investments by the latter has been found to help in attracting foreign direct investments (FDI) in PCPIRs,” he said.
“Besides, a consortium investment in cracker projects would help to insulate government companies from the cyclic fluctuations of the commodity industry,” he added.
The department’s policy for consortium investment has been forwarded for incorporation into the National Chemical Policy currently being framed by an inter-ministerial group, the official added.
PCPIRs are specially designated enterprise zones in India intended for the establishment of manufacturing facilities for petroleum, chemical and petrochemical production.
The Indian government has committed to providing the external infrastructure such as road and rail links from the zones, to be delivered through public private partnership (PPP) where possible.
The Indian government has approved five PCPIRs, at Vishakhapatnam in Andhra Pradesh, West Bengal, Dahej in Gujarat, Paradip in Orissa and Cuddalore in Tamil Nadu.
Government companies like Indian Oil Corporation Limited (IOC), Hindustan Petroleum Corporation Limited (HPCL), and ONGC Limited are acting as anchor investors in the projects, and have been courting foreign investment from companies including Qatar Petroleum, Qatar Petrochemicals, and Sabic.
“Investments in cracker units by downstream users would give greater comfort to these potential foreign investors, as well as spreading required equity investment,” the official said.
In another issue related to PCPIRs, the department is looking to change government feedstock allocation policies, wherein feedstocks would be allocated based on the requirements of the sector – such as natural gas for the fertiliser industry - instead of by the level of priority given to the sector.
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