SBI Caps to submit report on ONGC's Kakinada project

NEW DELHI: Merchant banker SBI Caps is likely to submit a feasibility report on Oil and Natural Gas Corp's (ONGC) Rs 25,600 crore export-oriented refinery-cum- petrochemical project at Kakinada in two weeks.

ONGC Chairman and Managing Director R S Sharma said the feasibility report on the 15 million tons capacity refinery was expected in two weeks time.
   
The company has asked for a slew of incentives, including free of cost land from Andhra Pradesh government to make the project viable. Besides 950 hectares of free land, ONGC also wants exemption from sales tax on sale of petroleum and petrochemical products, free power and water supply during construction phase and road and rail connectivity.
   
Sharma said even at the enhanced capacity of 15 million tons, rate of returns were only 10.27 per cent which would become negative in case of a 10 per cent rise in capital cost.

ONGC's subsidiary Mangalore Refinery is to hold 26 per cent stake in Kakinada Refinery Petrochemicals Ltd (KRPL), the company set up to implement the refinery project. IL&FS will hold 51 per cent stake and the balance would be with an Andhra Pradesh government-appointed agency.
   
Incidentally, automobile-to-banking group Hindujas have evinced interest in picking a majority stake in the refinery project. Former ONGC chairman Subir Raha, whose brain-child the project was, has since joined the Hinduja Group.

Sources said, ONGC has made it clear that it would proceed with the project only after getting confirmation from the state government for the incentives it had sought.