IOC’s Panipat petrochem hub plan hangs fire as board sits on approval

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New Delhi, Aug 26 : The Haryana government's ambitious plans to build a world-class petrochemical hub in Panipat, with an investment of around Rs 30,000 crore in collaboration with the Indian Oil Corporation (IOC), seems to be in jeopardy, with oil major’s board yet to give the approval for the project even after a lapse of four years since the signing of the memorandum of understanding (MoU

The Haryana government has now asked IOC to respond soon and threatened to even look at alternate ways to go ahead with the project, official sources told FE. Of the total of more than 2,500 acres envisaged for the project, the Haryana government has so far acquired around 900 acres, they said. However, the increase in petroleum prices and the consequent losses that the company has suffered has put IOC on the backfoot, sources said. The oil price rise has in turn increased losses in fuel sales and is now likely to result in overall losses to the tune of Rs 5,800 crore for IOC in this fiscal.

IOC, which had signed a MoU with the Haryana State Industrial & Infrastructure Development Corporation (HSIDC) to form a special purpose vehicle for the development of the hub, was to complete the construction work of the complex by 2007-2008. The project would generate employment opportunities for around 50,000 people and produce feedstock to manufacture plastic, specialty chemicals and pharmaceuticals.

Though not recognised as one of the proposed mega Petroleum Chemical and Petrochemicals Investment Regions (PCPIR), the project would come up on similar lines and house several special economic zones as well as huge storage facilities with IOC as the anchor tenant, sources said. IOC, however, did not respond to queries e-mailed to them by FE regarding this development.

The project, including Naphtha Cracker complex and downstream polymer facilities and other chemical units, would get a direct investment of around Rs 17,000 crores from IOC. As per the MoU, there were huge tax sops for the project apart from interest-free loans for seven years from the time of grant of such loans.

The state government would give financial assistance at 75% of the tax paid on sale of items produced in the hub for the first seven years from start of commercial production and 50% of the tax paid for the following three years, under VAT Act, 2003.