India’s ONGC exits Kakinada refinery

India’s Oil and Natural Gas Corp. (ONGC) has decided to exit projects to set up a refinery and a special economic zone in the southern state of Andhra Pradesh, the company said in a statement. ONGC was planning to execute the projects through its subsidiary Mangalore Refinery and Petrochemicals Ltd. (MRPL). “There have been various issues affecting the steering of projects of Kakinada Refinery and Petrochemicals Ltd (KRPL) and Kakinada Special Economic Zone (KSEZ),” the statement said. “Considering these factors, the management of ONGC and MRPL feel that it will be appropriate not to continue as equity partners in these two projects,” it said. ONGC was expected to own 46% in KRPL and 26% in KSEZ. The board of KRPL met twice on June 24, first when the ONGC Chairman and Managing Director, R.S. Sharma, announced the decision to exit and the second meeting where GMR Group was inducted as the new partner with a 51% stake. Sources said that ONGC wanted to focus more on its core activity of exploration and production of oil and gas, although the lack of tax incentives was also cited as a possible cause. (June 23/24, 2008)