Petrochemical complex: Center asked to settle or completely exempt VGF bill


Government offers ₹ 630 billion in electricity and water subsidies for 30 years

As part of its bid to build a petrochemical complex in Kakinada, the state government has requested the Union government to reduce the Funding for the Profitability Gap (VGF) of an estimated 5,615 billion to completely exempt it. The state government has also sought to cut corporate tax to 25% to help the state cope with the financial burden to some extent.

In addition, according to official figures, the state government has committed itself to providing electricity and water subsidies of almost 630 billion yen per year for an operating period of 30 years.

Industry Minister Mekapati Goutham Reddy, in his presentation to the Union Minister for Oil and Gas on Wednesday, named a global rate cut as a positive factor that should make the project largely viable and that the state government is ready to extend the support in other ways.

Tax income

He estimated the potential tax revenue from the project to the state at 350 crore per year and the net tax revenue to the Indian government at 1,750 crore per year.

The project is expected to attract an investment of 100,000 crore through the development of downstream and ancillary industries.

It will be a 1 MMTPA ethane-based petrochemical complex priced at approximately ₹ 32,900 crore and the product portfolio includes monoethylene glycol, linear low density polyethylene, polyvinyl chloride and propylene derivatives.

The targeted construction time is four years. The project is provided for in the AP Reorganization Act of 2014 and will become part of the Visakhapatnam – Kakinada Petroleum, Chemical and Petrochemical Investment Region (PCPIR).


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