PM Modi grants Naidu's ₹60,000 crore wish of petrochem hub, oil refinery

Within five days of Andhra Pradesh chief minister N Chandrababu Naidu meeting Prime Minister Narendra Modi, the Centre has acceded to a major demand of setting up an oil refinery and petrochemical hub in the state with an investment of ₹60,000 crore.

Naidu, a key ally in the National Democratic Alliance (NDA) government at the Centre, met top officials of Bharat Petroleum Corporation Limited (BPCL) on Wednesday to discuss the feasibility of setting up a refinery in the state.

According to people in the know, three locations were discussed for the refinery. These include Srikakulam, Machilipatnam and Ramayapatnam. The people said formal announcement of the refinery is likely to be made in the budget to be presented on July 23. The locations will be assessed and then finalised. Sources said this process will take up at least two months and the location may not be announced in the budget.


A source, who did not wish to be identified, told ET, "The announcement is politically sensitive as all three locations are in different parts of the state - north, central and south." An email query sent to BPCL went unanswered till the press time.

This is a big win for Naidu as he had pushed for setting up of a refinery during his meetings with the PM and petroleum minister Hardeep Puri.

Naidu's 16 MPs provide the much-needed support to the BJP-led NDA government. However, Naidu has been categorically stating that he has interests of his state in mind and is unwilling to rock the boat over any demand.

The refinery is a commitment made at the time of bifurcation of the state and laid down in the Andhra Pradesh Reorganisation Act 2014. Section 93 of the Act lays down that the Centre "shall take all necessary measures as enumerated in the Thirteenth Schedule for the progress and sustainable development of the successor states within a period of 10 years from the appointed day". The fourth point under "infrastructure" head of Thirteenth Schedule says, "IOC or HPCL shall, within six months from the appointed day, examine the feasibility of establishing a greenfield crude oil refinery and petrochemical complex in the successor state of Andhra Pradesh and take an expeditious decision thereon."

While BPCL and petroleum ministry have been tight-lipped about the move, Naidu took to microblogging site X to post, "Strategically placed on the eastern coast of the country, our state has a significant petrochemical potential. Today, I met with the representatives of the Bharat Petroleum Corporation Limited led by chairman and managing director, Mr Krishna Kumar. We explored the establishment of an oil refinery and petrochemical complex in Andhra Pradesh with an investment of 60-70,000 cr. I have sought a detailed plan and feasibility report in 90 days. About 5,000 acres of land will be required for this project, which the government looks forward to facilitating in a hassle-free manner."