Andhra Pradesh Launches $86 Billion Special Development Zone for Petrochemicals

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Researched by Industrial Info Resources (Sugar Land, Texas)--Andhra Pradesh is initiating one of India's largest Special Development Zones (SDZ). Under the official classification of a Petroleum, Chemical and Petrochemical Investment Region (PCPIR), the SDZ will cover an area of 603 square kilometers strategically located in a single corridor connecting the two industrial towns of Kakinada and Visakhapatnam. Both Kakinada and Visakhapatnam have two ports each and are well connected to India's largest express highway network, the Golden Quadrilateral.

The PCPIR will have petroleum, chemical and petrochemical manufacturing units that will cater to both the domestic and export markets. Subject to clearance by the center's committee on economic affairs, the SDZ will initially set up three refineries with a total capacity of 45 million tons per annum (TPA) (about 925,000 barrels per day). The Andhra Pradesh Industrial Investment Corporation (APIIC) will serve as the nodal agency and GTZ-Germany (Eschborn, Germany) will serve as the technical partner for environmental management. A PCPIR Development Authority is being set up to serve as the special-purpose vehicle for the project.

At the forefront of the project is a consortium of five companies: Gas Authority of India Limited (New Delhi); Hindustan Petroleum Corporation Limited (Mumbai, Maharashtra); Oil India Limited (Noida); Oil and Natural Gas Commission Limited (Dehradun; Uttarakhand); and Total (NYSE:TOT) (Paris).

Other companies expected to be part of the $86 billion investment are Air Liquide (Paris, France), Baker Hughes Incorporated (NYSE:BHI) (Houston, Texas), Bharat Petroleum Corporation Limited (Mumbai, Maharashtra), Biocon Limited (Bangalore, Karnataka), Continental Carbon (Houston, Texas), Indian Strategic Petroleum Reserves Limited (New Delhi), Mittal Energy Investments Limited (Luxembourg City, Luxembourg), Naturol BioEnergy Limited (Hyderabad, Andhra Pradesh), Reliance Industries Limited (Mumbai, Maharashtra) and Velankani (Piscataway, New Jersey). About U.S. $41 billion has already been committed to this initiative.

The central government will provide the necessary transport infrastructure while the state government will take care of power and water supply besides other basic infrastructure needs. Groundwork on the project has already started. The existing Vizag Kakinada Deep Water ports are being upgraded to handle the PCPIR cargo and a new port for the Kakinada Special Economic Zone (SEZ) is being planned. The first phase of the new Gangavaram port near Vizag is also scheduled to be commissioned by June 2008.

To provide faster road connectivity to Vizag, State Highway 97 and Chennai-Kolkata National Highway 5 are being expanded to four lanes, while the Vizag-Rajahmundry road is being made into a six-lane highway. The Kakinda and Gangavaram ports will be connected by a 138 kilometer long coastal highway.

A dedicated 220-kilovolt substation has already been built in the PCPIR. Jawaharlal Nehru Pharma City (Hyderabad, Andhra Pradesh) will take care of waste management in this region. A similar PCPIR is being planned at Dahej in the Bharuch district of Gujarat.

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