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 said.

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.