Sunday, January 28, 2007

Now, GoM to apply SEZ pill to petrochem hubs



NEW DELHI: After putting fresh SEZ approvals on hold till land
acquisition and rehabilitation policies are re-formulated, the UPA
government is set to employ similar economy for another economic project
— petroleum, chemical and petrochemical investment regions (PCPIRs).

The GoM on PCPIRs in its meeting here on January 15 decided to put a cap
on the number of PCPIRs and bar use of agriculture land for setting up
these regions, official sources told ET. The idea is that there won’t be
more than 10-12 such investment regions, although the exact number will
be decided by the Cabinet, these sources added.

The GoM also affirmed the view that PCPIRs need no tax breaks. It
reckoned that since these projects are to be backed by infrastructure
funding of $3 billion per region by the Centre, to give them tax sops
will be superfluous. Sources said the SEZ experience where the
government has been confronted with the problem of plenty (of demand)
and potential revenue pilferage has also weighed heavily on the GoM.

The management structure of PCPIRs could also be newly defined.
Initially, it was mooted by a high-power committee headed by principal
secretary to the Prime Minister that a management board will supervise
development and management of these investment regions.

The GoM has now decided to recommend the Cabinet that each state
governments wanting to set up a PCPIR will make a specific law for the
purpose. There will be a two-tier management structure — a board at the
political level and below that an empowered supervisory committee at the
executive level in which the PCPIR developer will also be represented.
“The GoM felt the need to give PCPIRs strong legal backing,” an official

Each PCPIR is envisaged to come up in 250 sq km, with minimum 40%
(25,000 acres) processing area. While the Centre will provide external
physical infrastructure linkages (rail, road, ports, airports), the
states will accord the region high quality power (open access as per the
state electricity regulatory commission) and water. The developer will
offer the PCPIR units common infrastructure such as chemicals storage
terminals, effluent treatment plants and create a green belt to
segregate the industrial units from human inhabitation.

States will enter into concession agreement with the developer who in
turn will charge fees for the services and facilities. As per the
sources, the GoM also decided to relax the proposed condition that
PCPIRs will be close to ports. Approval could be granted if there is
good connectivity with ports.

Four state governments have already expressed willingness to set up
PCPIRs Gujarat (Dahej), West Bengal (Haldia), Andhra Pradesh (Visag) and
Karnataka (Mangalore). Tamil Nadu, Maharashtra and Haryana have hinted
that they might propose PCPIR projects.

Petrochemical industry constitutes about 14% of industrial production
and 10.7% of exports. Each PCPIR will have a naphtha/gas cracker or a
refinery as the mother unit and hundreds of downstream units along
different value chains, from polymers to plastic-products to
PTA/MEG/acrilonitrile and polyester/acrylic textiles as well synthetic
rubber and colouring units. The PCPIR model is inspired by industrial
parks in Houston, Rotterdam, Shanghai, Jurong etc.


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