GMR group to acquire ONGC stake in Kakinada refinery
23 Jun 2008
Mumbai: Infrastructure major GMR will replace state-run Oil and Natural Gas Corporation (ONGC) in the proposed Rs31,000 crore refinery and petrochemicals plant at Kakinada in Andhra Pradesh, after the oil and gas company found the project unviable.
ONGC, which signed an agreement with the Andhra Pradesh government in September 2006 to set up the refinery, had sought tax incentives to the tune of Rs16,000 crore over eight years, to make the project viable. The state government, however, declined the demand.
The refinery, originally planned with a 7.5 million tonne per annum (mtpa) capacity, was later scaled up to 15 mtpa capacity to make it viable. "Even the larger refinery was unviable. Refineries are not our business. We will continue to concentrate on exploration and production," said an ONGC official.
ONGC has 46 per cent stake in the project through its subsidiary Mangalore Refinery and Petrochemicals (MRPL), IL&FS 51 per cent stake and the Andhra Pradesh government has a 3 per cent stake through Kakinada Seaports.
Various other groups such as the Hindujas, Reliance Industries and Essar Oil had shown interest in the refinery and petrochemicals project being implemented by Kakinada Refinery and Petrochemicals (KRPL).
The Andhra Pradesh government, however, was keen that the refinery be set up and wants ONGC to execute the project.
KRPL's shareholding will now be restructured with GMR controlling 51 per cent stake, IL&FS and the Kainada Seaports holding 46 per cent and the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) the remaining 3 per cent stake.