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Global energy major BP has decided to quit a joint venture with state-owned Indian Oil Corporation (IOC), which was to set up the world's largest acetic acid plant in Gujarat with proposed investments of $1 billion, or Rs 6,200 crore. The decision comes at a time when Prime Minister Narendra Modi is busy marketing India globally as part of his ambitious 'Make in India' vision to make India a global manufacturing hub.
Confirming the move, IOC chairman B Ashok told TOI, "The acetic acid plant in Gujarat didn't meet the viability standards of BP and they expressed their desire to move out of the project. We are very much working on the plant to make it viable and are evaluating tie-ups with other global firms. The plant is not off."
When asked for comments, a BP spokesperson, in a reply to an e-mailed query by this paper, said, "Indian Oil (IOC) and BP have been working closely since 2011 to explore options of setting up a potential acetic acid joint venture in Gujarat. Despite the best efforts of our combined teams, we have faced a number of challenges, particularly with capital costs, in developing an attractive project. Earlier this year, BP and IOC have jointly decided not to pursue this project. Given the excellent relationship we enjoy, we will also continue to work on other joint opportunities in the petrochemicals arena in future."
BP had signed an MoU with IOC in 2011 to set up the 50:50 joint venture to invest in a 1-million tonne per annum acetic acid plant in Gujarat along with associated gasification facilities for production of synthesis gas and production was slated to commence in 2015. The proposed acetic acid plant was to employ BP's Cativa XL technology, whilst the gasification facilities were to utilize petroleum coke feedstock from IOC.
Bob Dudley, global chief executive of BP, along with RIL chairman Mukesh Ambani had met Narendra Modi in October last year when he was the Gujarat chief minister and was nominated as BJP's prime ministerial candidate.
"Gujarat emphasizes how the above-ground factors largely based on good policy can make a major difference to the lives of many people. Gujarat, too, features prominently in our growth plans as we are hoping to set up one of the world's largest acetic acid plants here," Dudley had said then.
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