The Hindu Business Line : Kochi petrochem project — GAIL seeks sops from Kerala Govt

At the official-level meeting, the Kerala Government has reportedly assured GAIL that it would consider favourably the fiscal benefits to make the petrochemical project viable.

New Delhi , Feb. 22

IN order to make the proposed petrochemical project in Kochi economically viable, GAIL (India) Ltd has sought fiscal concessions from the Kerala Government.

The recent discussions held between a high-level team of GAIL and State Government officials are said to have focused on the issues of fiscal concessions and the procurement of land for the proposed petrochemical project.

The GAIL Chairman and Managing Director, Mr Proshanto Banerjee, is expected to meet the Kerala Chief Minister, Mr Oommen Chandy, sometime next month when these issues will be discussed further and a final decision would be arrived at, sources said.

At the official-level meeting, the Kerala Government has reportedly assured GAIL that it would consider favourably the fiscal benefits to make the petrochemical project viable.

According to sources, GAIL has requested for intervention of the State Government to help procure the land required for the project from FACT at the price indicated in the detailed feasibility report.

GAIL has also sought a one-time fiscal benefit of Rs 470 crore on account of work contract tax (a tax that is levied on services offered by a contractor to the principal), entry tax, stamp duty and electricity duty, spread over a period of 15 years. Any delay in the decision-making on these issues would impact the viability of the project as it may result into cost overrun, sources told Business Line.

The GAIL team was led by its Director (Finance) and the Kerala Government was represented by the State Chief Secretary, Principal Secretary (Finance), Secretary (IT), and Managing Director of Kerala State Industrial Development Corporation.

GAIL had signed a memorandum of cooperation with the Kerala Government in June 2004 for setting up a petrochemical plant in the State. The integrated grassroots petrochemical plant with a capacity of 400,000 tonnes per annum will be put up in Kochi at an investment of Rs 6,200 crore. The debt-equity ratio is likely to be 70:30, sources said.

The feedstock for this plant will be imported liquefied natural gas (LNG), which will be re-gassified at the terminal of Petronet LNG Ltd at Kochi, in which GAIL has 12.5 per cent equity.

This project is likely to be commissioned coinciding with the commissioning of the LNG terminal at Kochi.

There is all probability of getting Iran LNG for this terminal.

In addition, GAIL is also exploring the possibility of getting gas from sources such as Australia, Qatar, and Oman.

More Stories on : New Projects | Petrochemicals | Kerala | GAIL (India) Ltd

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