In a big win for Andhra Pradesh Chief Minister N Chandrababu Naidu, the Centre has approved a key demand for the establishment of an oil refinery and petrochemical hub in the state with an investment of Rs 60,000 crore, according to reports.

During a recent meeting with Prime Minister Narendra Modi and Petroleum Minister Hardeep Puri, Naidu had pushed for setting up of a refinery.

Naidu, whose TDP has 16 MPs in the Lok Sabha, is a crucial ally in the National Democratic Alliance (NDA). Since the BJP couldn’t win a majority on its own, it is dependent on allies like TDP and Nitish Kumar’s JDU to stay in power. However, Naidu has made it clear that he has the interests of his state in mind and will not rock the boat over any demand.

On Wednesday, the Andhra CM held discussions with top officials of Bharat Petroleum Corporation Limited (BPCL) to assess the viability of setting up this refinery.

Naidu took to X to inform, “Strategically placed on the eastern coast of the country, our state has a significant petrochemical potential. Today, I met with the representatives of the Bharat Petroleum Corporation Limited led by chairman and managing director, Mr Krishna Kumar. We explored the establishment of an oil refinery and petrochemical complex in Andhra Pradesh with an investment of 60-70,000 cr. I have sought a detailed plan and feasibility report in 90 days. About 5,000 acres of land will be required for this project, which the government looks forward to facilitating in a hassle-free manner.”

According to sources, three potential sites were deliberated upon: Srikakulam, Machilipatnam, and Ramayapatnam. Although an official announcement regarding the refinery is expected during the upcoming budget presentation on July 23, finalising the location will require an additional two-month evaluation period.

“The announcement is politically sensitive as all three locations are in different parts of the state – north, central and south,” a source told Economic Times.

The commitment to establish the refinery stems from the Andhra Pradesh Reorganisation Act 2014, enacted during the state’s bifurcation. Section 93 of the Act mandates the Centre to undertake necessary measures, as outlined in the Thirteenth Schedule, to ensure the progress and sustainable development of the successor states within a decade from the appointed day.

Specifically, the fourth point under the “infrastructure” section of the Thirteenth Schedule directs IOC or HPCL to assess the feasibility of establishing a new crude oil refinery and petrochemical complex in Andhra Pradesh within six months from the appointed day, and promptly make a decision on the matter.

The Congress, while taking a dig at the Centre’s “lackadaisical pace” for the implementation of the Andhra Pradesh Reorganisation Act 2014, said it’s hopeful that with Prime Minister Narendra Modi now lacking a majority, a rapid implementation of the legislation can be expected.

“An oil refinery and petrochemical complex in Andhra Pradesh was originally a commitment made by Dr. Manmohan Singh’s Government in the Thirteenth Schedule of the Andhra Pradesh Reorganisation Act 2014,” Ramesh said in a post on X.

“In fact, the ‘one-third’ Pradhan Mantri’s government was legally obliged to deliver the project within the last ten years, and IOC/HPCL were obliged to examine the feasibility of the project within six months,” he said.

“This lackadaisical pace of implementation of the Andhra Pradesh Reorganisation Act was one of the reasons why Chandrababu Naidu garu famously withdrew from the NDA in 2018,” the Congress leader said.

“Perhaps now that the ‘one-third’ Pradhan Mantri has lost his majority and his ego, we can expect rapid implementation of the Act,” Ramesh said.

The Andhra Pradesh Reorganisation Act, 2014, passed by the Indian Parliament bifurcated the state of Andhra Pradesh into two states: Telangana and the residual Andhra Pradesh. The bill was introduced on December 5, 2013, during the first day of the winter session in the Andhra Pradesh Legislative Assembly. The official formation of the two separate states occurred on June 2, 2014, Telangana was established with 10 districts.