PARTING WAYS

Calcutta/New Delhi, June 23: Oil and Natural Gas Corporation has pulled out of the proposed Kakinada refinery and petrochemical project in Andhra Pradesh, selling its controlling stake to the GMR group.

The public sector upstream oil company owns a 46 per cent stake in the 15-million-tonne refinery, while IL&FS holds 51 per cent. The project entails an investment of Rs 31,000 crore.

The Andhra Pradesh government, which wants the delayed refinery and petrochemical complex to take off, holds a 3 per cent stake in the joint venture, Kakinada Refinery and Petrochemicals Ltd (KRPL).

The refinery is being planned in a special economic zone for which land has already been acquired. The refinery will be part of a petroleum, chemical and petrochemical investment region, which will include Vishakapatnam and Kakinada.

ONGC will sell its stake in the SEZ company too. But GMR said it had not bid for ONGC’s 26 per cent share in the Kakinada Special Economic Zone (KSEZ).

“ONGC has been considering ways and means to establish a greenfield refinery in the SEZ at Kakinada. There have been various issues affecting the projects in KRPL and KSEZ. Considering these various factors, the management of ONGC and MRPL feel that it will be appropriate not to continue as equity partners in these two projects,” the statement said.

At the board meetings of KRPL and KSEZ held today, ONGC and MRPL communicated their intention to pull out of the projects.

When contacted, a GMR spokesperson said it was yet to receive any official communication from ONGC.

“We have made a formal proposal to acquire a 51 per cent stake in KRPL. We are awaiting its response,” he said.

He said GMR’s move was in line with the group’s intent to grow the oil and gas business.

“We want to set up a world class project with best technologies. It would be a globally competitive one,” he added.

Sources said the Congress government of Andhra Pradesh wanted ONGC to be out of the project because of the delay.