Haldia Petrochemicals Ltdtakeover of the suspended Nagarjuna Oil Corporation Limited (NOCL) project through the NCLT is a big step to revive Tamil Nadu’s largest private sector investment pegged at nearly ₹50,000 crore.

The oil refinery project revival will give a major boost to the economy in the port town of Cuddalore.

PCPIR anchor

NOCL was envisaged as the anchor facility for a PCPIR. It may be recalled that Cuddalore and Nagapattinam are part of a 256-sq km PCPIR (Petroleum, chemical and petrochemical investment region), the final notification for the Tamil Nadu PCPIR was issued by the State government in June 2017 notifying the delineated PCPIR area in the Cuddalore and Nagapattinam Districts as a Local Planning Area, under Tamil Nadu Town and Country Planning Act 1971.

The refinery project was to go onstream on March 1, 2012, but came to a grinding halt 90 days before as Thane cyclone damaged the infrastructure in November 2011.

The project was incorporated on May 20, 1991, to set up a six million tonne per annum (mmtpa) capacity petroleum oil refinery on 2,186 acres in Cuddalore, about 170 km south of Chennai. It was conceived by Pennar Group to relocate the operating 5-mmtpa refinery of Mobil from Woerth, Germany. However, due to non-commencement of work, it was replaced by NOCL, a joint venture of Nagarjuna Oil Refinery Ltd — a wholly-owned subsidiary of the Hyderabad-based Nagarjuna Fertilisers — with Tamil Nadu Industrial Development Corporation Ltd with an investment of ₹3,500 crore.

However, it was not an easy start but finally work commenced in 2006 after getting all the clearances.

When this correspondent visited the site in December 2011, a huge board said - “Plant inauguration – 120 days left.” With the March 1, 2012 deadline fast approaching, nearly 6,000 labourers were then working round-the-clock to ensure the refinery starts on time. Various facilities, including use of marine lands, access to port and related infrastructure, tankage and storage was almost ready.

By that time the project cost got further escalated to over ₹10,000 crore, which proved getting further funding almost impossible and resulting in invoking “ Force Majeure ” clause thereby halting the project and leading to cases filed by various creditors to whom NOCL owe 9,864.16 crore.

The Tribunal, on Thursday, approved HPL’s scheme to revive the NOCL under Section 230.

94 per cent haircut

HPL proposes to effect the payment through a Special Purpose Vehicle of a total sum of ₹600 crore to the liquidator of NOCL for the project assets in phases. This means, bankers and other financial institutions will take a 94 per cent ‘haircut’ in NOCL.

The NCLT order is great news for the State, said a senior government official. It’s been a long wait to revive the project, which could provide the much-needed boost to develop industries in and around Cuddalore, he added.

In September 2019, HPL signed an MoU with the Tamil Nadu government to invest nearly ₹50,000 crore in Cuddalore district mainly to convert the NOCL facility into a petrochemical complex. A high-level team from HPL represented by its Chairman and Managing Director Purnendu Chatterjee also met Chief Minister Edappadi K Palaniswami in February 2020 on the project.

With both the State government and HPL showing keen interest to revive NOCL, one can only hope that the project goes on stream soon and provide the much-needed boost to the State’s economy, said an official.

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