The Hindu : Business : Panel identifies locations for seven petrochem hubs

Online edition of India's National Newspaper
Tuesday, May 02, 2006

Business

Business

Panel identifies locations for seven petrochem hubs

Suggests nil crude oil import duty to remove pricing anomalies

NEW DELHI: A high-level Government panel has suggested nil import duty on crude oil to facilitate setting up of petrochemical hubs at seven locations.

The Committee on Feedstock Policy and Pricing for Petroleum, Chemicals and Petrochemical Investment Regions, headed by Petroleum Secretary M. S. Srinivasan, identified Dahej in Gujarat, Vizag in Andhra Pradesh, Kochi in Kerala, Haldia in West Bengal, Mangalore in Karnataka, Paradip in Orissa and Panipat in Haryana for setting up of petrochemical hubs.

Each hub, referred in the committee's report as Petroleum, Chemicals and Petrochemical Investment Region (PCPIR), must include a refinery and petrochemical plant with downstream chemical units.

Suggesting elimination of customs duty on crude oil, it said, "this single measure will also remove anomaly in pricing of naphtha supplied to petrochemical industries, from refineries standpoint.

To provide incentives for PCPIRs for domestic market sales, no further change may be made in customs tariff of petroleum products along with reduction in crude oil duty to nil.''

As for naphtha, it said, "to increase availability of domestic naphtha, and in order to eliminate tariff induced infructuous trade movements, there is a case for treating naphtha supplies for polymers use/petrochemicals as deemed exports with attendant duty drawback benefits for refineries.''

Stable domestic taxes

Besides, it has recommended that the government provide a stable tax regime in terms of Central, State, local and income taxes for 10-15 years; an appropriate mix of capital grants or soft loans; tariff incentives for their domestic sales; and automatically apply SEZ norms to further the development of PCPIRs.

On setting up of PCPIRs, the committee said the Petronet LNG terminal could provide adequate gas for one new plant at Dahej. In addition, naphtha from fraction was available at the location. Expansion of Hindustan Petroleum Corporation's refinery at Vizag to 15 million tonnes would make available 1.6 million tonnes of naphtha for such a unit.

Kochi PCPIR could get naphtha from Kochi Refineries Ltd and LNG to be imported by Petronet LNG Ltd.

Mangalore Refinery and a new LNG terminal could support a PCPIR at Mangalore while Haldia refinery and refineries in Northeast and Barauni could aid a PCPIR at Haldia, the report said. — PTI

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