Union Government Relocates Major Refinery Projects from Maharashtra to Gujarat and Andhra Pradesh
The Indian government is shifting plans for two large-scale oil refineries, each with an annual capacity of 10-15 million tonnes and integrated petrochemical units, from Maharashtra’s Ratnagiri district to Gujarat and Andhra Pradesh. This decision, reported by The Times of India, aligns with ongoing efforts to bolster bilateral energy ties with Saudi Arabia.
Partnerships with Saudi Aramco and Strategic Shifts
Oil and Natural Gas Corporation (ONGC) is likely to partner with Saudi Aramco for the refinery in Gujarat, while Bharat Petroleum Corporation Limited (BPCL) is set to lead the Andhra Pradesh project. These facilities will offer Saudi Arabia a strategic foothold to secure crude oil sales in India, countering its declining share in India’s crude imports over recent years.
Renewed Talks and a $100 Billion Promise
The relocation of these projects comes ahead of Prime Minister Narendra Modi’s anticipated meeting with Saudi leadership, which aims to rejuvenate Saudi Arabia’s $100 billion investment pledge in India. While the commitment has seen slow progress, key sectors such as railways, ports, and waterways remain on the agenda for Saudi involvement.
Why Ratnagiri Fell Behind
The Ratnagiri refinery project faced significant challenges, including strong local opposition to land acquisition and skepticism over the feasibility of the originally proposed 60-million-tonne mega refinery. The delays have made Gujarat and Andhra Pradesh more viable options.
- Gujarat: Already hosting major refineries in Jamnagar (Reliance and Nayara Energy) and Vadodara (Indian Oil), Gujarat is poised to expand its dominance in the refining sector.
- Andhra Pradesh: The state has been advocating for a refinery since its bifurcation in 2014, with promises from the Centre gaining renewed urgency.
Political and Economic Implications
The relocation of high-profile industrial projects from Maharashtra to Gujarat has fueled political controversies:
- The $20 billion Vedanta-Foxconn semiconductor project was moved from Pune to Gujarat in 2022.
- The Tata-Airbus C-295 aircraft manufacturing facility, initially planned for Nagpur, was also shifted to Gujarat in the same year.
These relocations have drawn criticism of favoritism towards Gujarat, raising concerns about Maharashtra’s ability to retain industrial investments.
Challenges and Opportunities in Saudi-India Collaboration
While the refinery projects in Gujarat and Andhra Pradesh are promising, they face hurdles requiring detailed groundwork. A revised bilateral investment treaty with Saudi Arabia is under negotiation to address Saudi concerns about investment protections.
If successful, these projects will enhance India’s refining capacity, secure its energy future, and strengthen ties with Saudi Arabia. As the world’s largest oil exporter collaborates with India, these ventures could help cement India’s position as a global energy hub, catering to both domestic and export markets.