CALCUTTA (PTI): India’s corporate giant, the Tatas, have withdrawn two of their companies from the Haldia petrochemicals project in the west Bengal state.
The two companies are: Tata Tea Lid and Tata Chemicals.
A joint statement released by state chief minister Jyoti Basu and the Tata son’s chairman J.R.D.Tata here June 19 said that the Tata would consider internal changes in their group for participation in the Rs 45 billion joint venture project.
The statement said that the changed economic situation in the country had necessitated a review of the Haldia petrochemical project by the west Bengal government and the Tata group.
Zinxed almost since its embryonic stage the latest blow to the Haldia Petrochemical Ltd.’s (HPL) came on account of the devaluation of the rupee in 1991.
The cost of the project which was estimated to costRs30 billion till the original three lakh ton of ethylene production capacity was also curtailed by 30% at a board meeting with a corresponding scaling down of the foreign exchange component to 280 million dollars.
However, since the beginning of this year, rumors were doing rounds about the Tata’s withdrawing from the projects its viability was getting eroded.
At one stage, the Argentina based multinational Lybra International, was believed to have made an offer to invest in the project although officially it was never admitted that the offer was for the HPL, The slate government, however spumed the offer saying that there was no scope for a second petrochemical project in the state.
Things began getting complicated for the project when the financial institution Industrial Development Bank of India (IDBI) said that its fund release would be made in commensuration with the state government.
The IDBI also said that the phase wise implementation of the HPL would have a bearing on its viability as true returns would start coming only when both the phases were implemented and all the items in the product miss were in commercial production.
The stake for promoters increased substantially following the changes in the debt equity norms made by the IDBI which necessitated increased equity funding by the promoters.
The project which had come to symbolize disharmony between the center and the state was finally cleared in October 1989 with the then prime minister late Rajiv Gandhi laying its foundation at Haldia, around 150kms from here. But like most other public sector projects, the Haldia project has been beset with problems of bureaucratic red-tapeism and corruption. The Tatas presence which lent some credibility to the project have also now deserted the sinking ship which now has little hope of being saved.
Article extracted from this publication >> June 25, 1993
