State-owned exploration giant Oil and Natural Gas Corporation on Monday decided to exit the Rs 25,600 crore Kakinada refinery, petrochemicals and SEZ project. It will be replaced by infrastructure major GMR Group which would get 51% equity in the venture, that had also been eyed by the Hinduja group. "We have decided to exit the refinery...There have been various issues affecting the steering of these projects," ONGC chairman R S Sharma said on Monday after the boards of the two special purpose vehicles formed for the refinery and the SEZ projects met to take the decision. ONGC, through its refining subsidiary MRPL, was to hold 46% in Kakinada Refinery and Petrochemicals Ltd and 26% in Kakinada SEZ. ONGC has officially cited lack of fiscal sops from the state government for pulling out as it made the project economically unviable. But insiders said the decision was prompted by Sharma's bid to get ONGC to concentrate on its core competence of oil and gas exploration and production. His predecessor, Subir Raha, had drawn a blueprint to catapult ONGC into the second largest refiner in the country as part of a grand plan to turn the company from an explorer into a fully integrated energy firm. But after his exit, the managment under Sharma is refocusing on exploration and production of oil. ONGC had put a slew of conditions, including Andhra Pradesh government giving 950 acres of land free of cost, sales tax exemption and fiscal concessions equivalent to a Special Economic Zone, for setting up the refinery at Kakinada. The concessions would have cost the state government about Rs 16,000 crore. Originally, the refinery was planned with a capacity of 7.5 million tonnes. But Engineers India Ltd did not find the size economically feasible and the capacity was doubled to 15 million tonnes. The estimated cost of setting up the 15 million tonne refinery stood at Rs 25,000 crore. Besides, Rs 600 crore would be needed to build a single-point mooring and the sub-sea pipeline for transportation of crude oil to the project site. KRPL, the SPV will now have Infrastructure Leasing and Financial Services Ltd and Kakinada Seaports together holding 46% stake and APIIC rest.