Thoothukudi gears up to host Rs 75,000 crore petrochem unit

CHENNAI: Thoothukudi is all set to snap another mega deal, this one involving a massive USD 9 billion investment, as the State government is in the final stages of formalising the setting up of a world-class petrochemical facility in the port city in the south.

The project is mooted by the Sakthi Group of Companies of Coimbatore, which has already signed a facilitation agreement with UK’s Lamant, that will usher in the foreign direct investment (FDI) through a Qatari association.

“The in-principle agreement for the USD 9 billion has been signed. We are waiting to complete the package and other terms and conditions,” T Rajkumar, director at the 90-year-old diversified group, told DT Next, adding the deal is scheduled for February-end as the nitty-gritties are getting finalised.

In 2020, the Southern Pearl Refinery and Petrochemicals (SPRPPL) had joined hands with a Kuwait partner to establish a pure refinery in phase I and petrochemical in phase II. However, the deal did not fructify due to COVID-19 and other business disruptions. Rajkumar, also a director on SPRPPL board, said the business plan was changed to make petrochem as the focus.

Opting for the downstream industry through the new venture seemed viable considering the government is seemingly unwilling to disrupt the availability of petrol and diesel from the public sector behemoths.

“We were told that over and above the supply of diesel and petrol, it would make sense if our plant was able to service the needs,” he said, noting that the plans were re-drawn to tap the huge potential offered by the downstream industries. The feedstock is crude from the Middle East, Russia, Europe, South America, etc., he added.

Touting the latest project as a game changer for Tamil Nadu, as there is no mega petrochemical complex in south India, he said this “modern” plant would also cater to the entire value chain, generating direct employment in excess of 10,000 and about 30,000 to 40,000 jobs indirectly.

The complex will come up on 2,000-plus acres in Thoothukudi. “We were shown few location options, including one in Thoothukudi and another in between the port city and Nagapattinam. We preferred the former,” he said, adding that the company would also have a tanking facility inside the port.

The project will also result in the establishment of a mega petrochemical park for the state.

Outlining the contours of the deal, Rajkumar said, Sakthi Group would act as the local partner of the UK-based Lamant. “This is going to be 100 per cent FDI with the involvement of the highly influential and seasoned businessman from Qatar,” he said, without divulging the name of the Qatari associate.

As there is a long-drawn process that would include mandatory environment assessment impact report besides understanding the GST and CGST implications, he said the current blueprint of the project is aimed at tapping the enormous potential offered by the growing clamour and demand for electric vehicles.

“Demand for diesel and petrol is down and we are more focused on the green EV space. The availability of raw material required for setting up this petrochemical project is abundant with the Qatari businessman,” he said, adding a new agreement had been entered into with the State government, which was also aligned with the Centre’s ‘Make-In-India’ vision of reducing imports.

The world-class facility will be on a par with the Hazira and Jamnagar units, Rajkumar claimed, adding there are 28 to 34 items that had been identified for production. “We are in the final stages and our Qatari partner already has customers. The strategic location would give us the logistic advantage also,” he noted.