The seven long years, the Kakinada will prosper with advanced industrialization was first promised, after that the stalemate is still continuing over establishment of Petrochemical Complex at Kakinada in Andhra Pradesh.

This ibdustries can help to generate revenue for cash-starved Andhra Pradesh as the Centre once again had thrown the ball in the court of the YS Jaganmohan Reddy government.

This comes months after a working group was set up in June by the Union Petroleum Ministry on the request of the State government to find a solution to the Viability Gap Fund (VGF) that had turned a sticky wicket between both the Centre and State government to set up the capital intensive project.

After Chief Minister YS Jaganmohan Reddy met the then petroleum minister Dharmendra Pradhan in June and a follow-up meeting by State Industries Minister, Mekapati Goutham Reddy with the Union Minister, it was reliably learnt that the Union government had, in principle, agreed to the alternatives proposed by the government to shun the VGF.

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A working group appointed by the Union Petroleum Ministry under the chairmanship of Joint Secretary (Refineries), was to have worked on the new modalities and an official announcement on the way forward for the establishment of a petrochemical complex was expected.

However, instead of an announcement on the new modalities, the Centre  reiterated that it is up to the government to take a call on the project.

“Oil Public Sector Undertakings (PSUs) have indicated to the Government of Andhra Pradesh (GoAP) that Viability Gap Funding (VGF) is necessary to make the project viable. GoAP has requested the Government of India (GoI) to fund the Viability Gap for this Project. The Ministry of Petroleum and Natural Gas has conveyed to GoAP that Refinery and Petrochemical Projects are capital intensive projects and require huge amounts of investment. It was also conveyed that the proposed project shall have a direct, indirect and induced impact on the economy of Andhra Pradesh which shall, besides industrialization, result in substantial increase in income, output, employment and tax-earning in the State.

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Accordingly, the State government may take appropriate decisions on the issue in the overall interest of the State,” Union Petroleum Minister Hardeep Singh Puri told Rajya Sabha during the ongoing winter session of the Parliament.

Government of Andhra Pradesh (GoAP), GAIL India Limited (GAIL) and Hindustan Petroleum Corporation Limited (HPCL) signed an MoU on January 27, at Visakhapatnam during the Partnership Summit for establishing Petrochemical Complex at Kakinada with an estimated cost of Rs 32, 901 crore.

A feasibility study has been carried out for the project. The State government was hopeful that the Centre had agreed to the alternative financial model proposed by the State government as there have been regulatory changes recently like reduction in corporate tax and interest rates.

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Establishing a greenfield crude oil refinery and the petrochemical complex has been mandated under Schedule XIII of the AP Reorganisation Act, 2014, but the project has never seen the light since then.

According to the MoU signed in 2017 oil PSUs were to set up the 1.5 MMTPA petrochemical complex at a cost of Rs 32,901 crore on a 2,000-acre site in the Kakinada Special Economic Zone.

The proposed complex, with a cracker unit, was supposed to produce ethylene and its derivatives. #KhabarLive #hydnews

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A senior journalist having 25 years of experience in national and international publications and media houses across the globe in various positions. A multi-lingual personality with desk multi-tasking skills. He belongs to Hyderabad in India. Ahssanuddin's work is driven by his desire to create clarity, connection, and a shared sense of purpose through the power of the written word. His background as an writer informs his approach to writing. Years of analyzing text and building news means that adapting to a reporting voice, tone, and unique needs comes as second nature.