INDIA BUSINESS WORLD - AUGUST 2006
THE MONTH THAT WAS...

ONGC DREAMS BIG ON M'LORE SEZ; TO INVEST RS 10K CR, CREATE1.7 L JOBS

ONGC will pump in about Rs 10,000 crore in the Mangalore Special Economic Zone (SEZ) which has been approved recently by the Board of Approvals for SEZs. The Mangalore multi-product SEZ, expected to start operations in the next two years, will give jobs to 1,70,000 in the first five years.

ONGC, the main promoter of Mangalore SEZ Ltd, is working out details for investing at least Rs 10,000 crore in the facility. An estimated Rs 1,050 crore would be pumped in initially to develop infrastructure at the SEZ. This will include the cost of land and building key infrastructure like ports, airports, roads, drainage and water supply.

The special purpose vehicle (SPV) floated for the SEZ will have a capital of Rs 300 crore. It will raise Rs 600 crore as term loans while Rs 150 crore would be brought in from internal sources. The SEZ, to be spread over 1,320 hectares, will have a processing area of 700 hectares. Once the land acquisition process is complete, Mangalore SEZ Ltd plans to raise foreign equity for its project.

Exports from the SEZ in the initial 3-4 years has been estimated at Rs 5,000 crore per year which will subsequently rise to Rs 8,000-10,000 crore upon achieving optimum capacity utilisation.

According to details filed with the government, the Mangalore SEZ is favourably located as it is close to both seaport and airport. The New Mangalore Port is adjacent to the southern part of the SEZ site and at about 5km from the centre of the site.

The nearest airport is at Mangalore which is 5km from the proposed SEZ boundary. The Konkan railway passes through the proposed site and an existing Konkan railway terminal is located at the centre of the proposed site.

The Mangalore SEZ is among the host of projects that have been approved by the Board of Approval for SEZs so far. The clearance is significant since the government is not clearing new applications since the total number of SEZs has hit the initial ceiling of 150.