Letter to Union Minister of Chemicals and Fertilizers

Sri. Ananth Kumarji,

Through this letter, I wish to bring to your kind notice certain important developmental matters of Kerala pertaining to the Ministry of Chemicals and Fertilizers with a request for your personal intervention to resolve these for a favourable and timely action.

i. Setting up of a Centre of National Institute of Pharmaceutical Education and Research (NIPER) at Bio360 Life Science Park at Thiruvananthapuram, Kerala (A State Governments Institution)
ii. Proposal for setting up of Plastic Park by Central Institute for Plastic Engineering and Technology (CIPET) under the Plastic Park Scheme of Government of India at 40 acre land identified by Kerala Industrial Infrastructure Development Corporation (KINFRA)
iii. Setting up of a Pharma Park at Kochi, Kerala
iv. Setting up of a Petro-Chemical Park at Kochi, Kerala
v. Setting up of an efficient and cost effective Urea Plant by strengthening the Fertilizers and Chemicals Travancore Ltd (FACT), Udyogamandal, Kochi, Kerala.
vi. Review the decision to wind up the HOCL unit at Kochi
2. In this regard, detailed notes on each of the project/issues mentioned above are enclosed with this letter for your kind perusal.
3. I hope that with your personal intervention, these issues shall get resolved early and the Government of Kerala would be able to go ahead with the execution of these projects at an early date with your kind support.

Yours sincerely,

(Pinarayi Vijayan)

Shri Ananth Kumar
Honble Union Minister of Chemicals and Fertilizers and
Parliamentary Affairs
Government of India
Shastri Bhawan, New Delhi

ANNEXURE I

1. Setting up of a centre of National Institute of Pharmaceutical Education and Research (NIPER) at Bio360 Life Science Park at Thiruvananthapuram, Kerala (A State Governments Institution)

Bio360 Life Science Park is a state-of-the-art infrastructure facility being established by Government of Kerala at Thiruvananthapuram.The Park is promoted by Kerala State Industrial Development Corporation and would provide developed plots for large and Integrated Bio-IT companies to set up their campuses and ready-to-use modular officers, wet and dry lab space for intermediate, small and startup companies. Situated at Thonnakkal along Thiruvananthapuram – Kollam Highway and spread over a sprawling 75 acre campus, this unique park is dedicated to upstream areas of translational research in biotechnology sector. It is strategically located at the gateway of the IT corridor in the vicinity of major R&D institutions such as Sree Chitra Tirunal Institute for Medical Sciences and Technology, Trivandrum (SCTIMST), Rajiv Gandhi Centre for Biotechnology (RGCBT), and Jawaharlal Nehru Tropical Botanic Garden and Research Institute (TBGRI) amongst others.

The Bio 360 life sciences park provides ultra-modern facilities such as a cGMP compliant bio-process facility for pilot scale production and a pre-clinical toxicology laboratory for functional and strategic requirements to take a concept from ideation to product commercialization. The Bio 360 Life Sciences Park offers a nurturing environment from start-up entrepreneurs to large companies catering to every need from research to commercialization and capacity building within one ecosystem. The park is a focal point for convergence of research innovation and skill development and is the very first life sciences park in India having all these unique features and facilities.
Since Kerala is being considered to set up a centre of the National Institute of Pharmaceutical Education and Research (NIPER), State Government offers Bio360 Life Science Park in Thiruvananthapuram, Kerala for the purpose. Bio360 Life Science Park would be the ideal location for building up an excellent centre of the NIPER for advanced studies and research in pharmaceutical sciences.

ANNEXURE II

2. Proposal for setting up of Plastic Park by Central Institute for Plastic Engineering and Technology (CIPET) under the Plastic Park Scheme of Government of India at 40 acre land identified by Kerala Industrial Infrastructure Development Corporation (KINFRA)

The State Government has submitted a proposal vide letter No.255/PA/2016/PrlSecy (Inds & Comm.) dated 16-6-2016 under the Plastic Park Scheme of Government of India for setting up a Plastic Park in 40 acres of land already in the possession of Kerala Industrial Infrastructure Development Corporation (KINFRA), the state implementing agency for the development of industrial infrastructure in Kerala. The total project cost excluding land cost (Rs.40 crores) is estimated at Rs.98 crores for establishing the requisite infrastructure and other common facilities in the Park.

The proposed Plastic Park shall be a cluster of manufacturers of plastic items, equipments, tools and dies required for such manufactures. The Park will have plastic management centres for recycling and reuse of plastic wastes. The recycling and reuse of plastic wastes is proposed to be done in the plastic management centre to be located in the park. The Plastic Park would also provide assistance to start-up ventures in terms of infrastructure, concessional power, concession finance, procurement of raw materials, marketing of products, etc.

Government of Kerala requests for your kind intervention so as to advise the Central Institute for Plastic Engineering and Technology (CIPET) to establish a centre of excellence in the Park for training in plastic die and tool manufacturing, design and development of plastic items etc., which would help to develop skill to the local youth. Such highly trained youth can find ready employment in the plastic park as well as in other States and Gulf countries. There is huge demand for plastic products in the State especially in the sophisticated plastic items in Medicare and industry and the presence of CIPET in the Park will be an added boost to cater to this sector of plastic industry.

KINFRA shall be the implementing agency for the setting up, operation and maintenance of this Park. Since, KINFRA is a statutory body of the State Government constituted exclusively for the development of industrial infrastructure in the State, there is no need of a separate SPV for implementing this project as contemplated under the Plastic Park Scheme.

It may be noted that the State Government has already submitted the proposal in this regard proposal vide letter No.255/PA/2016/PrlSecy (Inds & Comm.) dated 16-6-2016 for setting up a Plastic Park in 40 acres of land. In this regard, Honble Minister for Industries and Sports, Government of Kerala had also written a letter No. 52/M(Ind & Sports)/2016 dated 27.06.2016 to Honble Union Minister of Chemicals and Fertilizers, Government of India.

ANNEXURE III

3. Setting up of a Pharma Park at Kochi, Kerala

As it is already been announced by the Honble Union Minister of Chemicals and Fertilizers, Government of India, Kerala is being considered for setting up one of the six Pharma Parks to be established in the country. Government of Kerala appreciates this kind gesture and is grateful to Government of India for choosing Kerala as one of the centres for pharma park. Kerala is a major consumer state for pharma products, with 17% by value of the national consumption whereas the production facility of Pharma products in the state is less than 0.5% which is quite insignificant compared to the demand. As a result, the state is depending on other states for its huge requirement of pharma products.

Though around 3000 pharmacists are registered in the state through pharmacy council every year, only 1% of them have employment opportunities in the state. If more industries come up in the pharma sector, employment opportunities for these professionals shall be created substantially.

In order to ensure abundant availability of pharma products and to enable pharmaceutical industry in the state to play a leading role in the country, Kerala State Industrial Development Corporation Ltd (KSIDC), is keen to establish a state of the art Pharma Park with quality infrastructure in Kochi.

Fertilizers And Chemicals Travancore (FACT) is having about 620 acres of un-utilized land in Ambalamedu, Kochi. Out of this, an extent of 170 acres has been earmarked for BPCL expansion project. Around 450 acres of balance land is available with FACT. It is proposed that a Special Purpose Vehicle (SPV) with FACT and KSIDC as shareholders, may be formed, wherein the cost of land will be treated as the equity of FACT and KSIDC can invest in creating basic infrastructure facilities like internal roads, power, water etc to develop the land into a prime industrial area where the Petrochemical complex and the proposed Pharma park can be located. The land is proposed to be allotted to prospective entrepreneurs and FACT will be able to recoup the entire cost of the land from the lease premium on such allocation.

I take this opportunity to invite your kind attention for formation of SPV between FACT and KSIDC and transfer 300 acres of land owned by FACT to the SPV for setting up the Pharma Park.

ANNEXURE IV

4. Setting up of a Petro-Chemical Park at Kochi, Kerala

With the substantial expansion undertaken by Bharat Petroleum Corporation Limited (BPCL) in its Kochi Refinery, various petrochemical base products like Propylene, Ethylene etc will be available in the location. BPCL is implementing a Petrochemical Complex to utilize the base products for value addition. The State Government also intends to promote a Petrochemical Park in the region to promote production of final end products using the products of BPCL.

The BPCL Kochi Refinery and the Fertilizers and Chemicals Travancore Limited (FACT) Udyogamandal Division are situated in adjoining land at Kochi. FACT has about 450 acres of land remaining unutilised and it is worthwhile to explore the possibility of setting up the Petrochemical downstream projects in the available area. It is an added advantage that the area being adjacent, the raw materials required for the Petrochemical sector can be transferred through pipelines from BPCL Refinery. It is proposed to establish the said Petrochemical Park in 150 acres of land available in FACT. It is proposed to form a Special Purpose Vehicle (SPV) with FACT and KSIDC as shareholders, wherein the cost of land will be treated as the equity of FACT. KSIDC shall create basic infrastructure facilities like internal roads, power, water etc and the cost of land will be paid back to FACT, when lease premium on land is collected from the prospective entrepreneurs while allotting the land.

Formation of an SPV between FACT and KSIDC and transfer an extent of 150 acres out of the unutilized land available with FACT to the SPV for setting up the Petrochemical Park need to be considered at the earliest.

ANNEXURE V

5. Setting up of a Urea Plant at Kerala Fertilizers and Chemicals Travancore Ltd (FACT), Udyogamandal, Kochi
Fertilizers and Chemicals Travancore Ltd (FACT), Udyogamandal, a pioneer fertilizer and chemical industry in Kerala, was operating profitably till 1999, slipped into loss on account of usage of costly Naphtha as feedstock and also want of adequate technology upgradation and diversification. Currently this major industry in Kerala is surviving with a temporary relief of Rs.1000 crores sanctioned by the Department of Fertilizers, Government of India to maintain its operations. Over the years, the turnover and employment potential of the company declined drastically.

India is importing close to 90 Lakh Tonnes of Urea every year from China and the Arabian Gulf countries. In 2010, on account of massive increase in the import of urea, the Government of India decided to modernize and reopen most of the closed down Urea plants with the support of cash rich Central Public Sector Undertakings. FACT was not included in this revival scheme.

Urea is available in our market at a lower price than the indigenous one as the other countries have started producing urea from natural gas. FACTs 3.3 lakh TPY Urea plant at Ambalamedu based on Naptha was closed down in 2002 due to lack of financial viability. The long term revival and sustainability of the operations of FACT depends on construction of a world class Urea plant having a capacity of 12 lakh tonnes per year at Ambalamedu, Kochi using natural gas as feed stock. Now that the Kochi LNG Terminal has become operative, natural gas is readily available at the site. The vast infrastructure and utilities catering to the old plant is available in good order at Ambalamedu.

Hence the main ammonia and urea plants alone need to be built with the support of the above infrastructure for which the order of magnitude investment would be around Rs.4000 Crores. It is suggested that Government of India may take an immediate initiative to put up Urea plant as stated above. This diversification scheme may please be taken up as a joint sector initiative as in other Urea Plants by bringing in profit making Central PSUs, particularly in the Petroleum/Natural Gas sector, as stakeholders like GAIL/ONGC.

ANNEXURE VI

6. Review the decision to wind up the HOCL Unit at Kochi

Hindustan Organic Chemicals Ltd (HOCL) has a unit in Kerala, which produces Phenol, Acetone and Hydrogen Peroxide. Consequent to the decision to exempt import duty for Phenol and Acetone in 2012 the Kochi unit became a loss making one. It may be noted that, the Kochi unit started functioning since 1987 and has been consistently making profits till the above import duty exemption.

After a number of representations, import duty was re-introduced on Phenol and Acetone and presently the Kochi unit is in a position to function on a profitable basis. However, the main unit of HOCL in Maharashtra has been making a huge loss over a period of time and the net worth of HOCL became negative resulting in the company being referred to BIFR. In an initiative led by Prime Minister’s office on 3rd March, 2016 a revival package of HOCL was formulated. However, in the BIFR hearing on 21st July, 2016, Government of India has informed that HOCL will be closed down and wound up.

Considering the fact that, Kochi unit of HOCL can run in a profitable manner, it is requested that, this decision to wind up HOCL may be reviewed and Kochi unit of HOCL may be allowed to continue as a stand alone unit.