Bangalore: The country's biggest oil producer, Oil and Natural Gas Corporation Limited (ONGC), will make its petrochemical foray this week when Prime Minister Manmohan Singh lays the foundation stone for a Rs. 4,900-crore Aromatic Complex in Mangalore.

"The Prime Minister will lay the foundation stone for ONGC's one million tonnes per annum capacity Aromatics (petrochemicals) Complex in Mangalore on June 23 (Friday)," a company official said.

The petrochemicals complex project will be executed through a Special Purpose Vehicle (SPV) of ONGC in which the corporation will hold 46 per cent stake and its subsidiary, Mangalore Refinery and Petrochemicals Ltd., (MRPL) three per cent. The balance will be held by financial institutions and banks.

The official said the aromatics project would be completed in three years after finalisation of the process licensor and the engineering aspect, which was expected in a year.

Naphtha produced at MRPL would be the feedstock for producing petrochemical building blocks paraxylene and benzene.

The petrochemicals complex forms part of ONGC's over Rs. 35,000-crore investment in the Mangalore Special Economic Zone (SEZ), which comprises a new refinery with a capacity of 15 million tonnes per annum, a power plant, LNG (liquefied natural gas) re-gasification terminal, C2-C3 extraction plant from re-gasified LNG, and general industry, trade, banking, telecommunications and allied services for supporting the activities of units in the SEZ. The Mangalore SEZ would be the first Petroleum, Chemicals, Petrochemicals Investment Region (PCPIR) of the country.

While clearing ONGC's Mangalore project, the Prime Minister had allowed the firm to float wholly owned subsidiaries for setting up petrochemical and power units envisaged as part of the SEZ. Once work on the project starts, ONGC will float equity in the market and/or to non-competing technology partners and retain a minimum of 26 per cent stake and exclusive management control. The Union Government-owned New Mangalore Port Trust (NMPT) is expected to pick up an equity stake in the SEZ in lieu of the land given for setting up the project.

The percentage of equity to be held by NMPT in the SEZ will be decided after the Union Ministry of Shipping gives its "in-principle" nod for the major port to join the project, the official said.

An SPV named "the Mangalore SEZ Ltd." has been incorporated to develop the Mangalore SEZ. The new company is a joint venture between ONGC (the anchor co-promoter), the State Government (through the Karnataka Industrial Area Development Board), Kanara Chamber of Commerce and Industry (KCCI)and Infrastructure Leasing and Financial Services Ltd (IL&FS). ONGC will hold 26 per cent of the equity in the SEZ, and KIADB 23 per cent. The balance will be jointly owned by the chamber and IL&FS. If NMPT joins the project, the combined equity of KIADB and NMPT will be 23 per cent.

The SEZ will be developed in an area of about 2,450 acres, of which 840 acres has been acquired by KIADB. The process of acquiring the rest of the land required is in progress, Industry Ministry officials said.

Officials reckon that the Mangalore SEZ will improve the economy of the coastal zone in the State and provide substantial employment opportunities, both direct and indirect.

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