Govt admits two decade-delay in Asom Gas Cracker Project

New Delhi, Mar 19 (UNI) The Government today admitted in the Lok Sabha that the Asom Gas Cracker project was delayed by over two decades.

Minister of State for Parliamentary Affairs B K Handique in a written reply said as per the Assam Accord signed by the Centre in 1985, Government renewed the commitment for the speedy all round economic development of Asom, so as to improve the standard of living of the people. Special emphasis would be placed on education and science and technology through establishment of national institutions.

He said the Asom Gas Cracker Project was initiated in pursuance of this clause. Initially this project was to be implemented by the Asom Industrial Development Corporation (AIDC) and Reliance Industries Limited (RIL) under a joint Venture company named Reliance Assam Petrochemicals Limited (RAPL).

The Governemnt on September 3, 1994 approved a capital subsidy of Rs 377 crores for the project. The Ministry of Petroleum and Natural Gas (P and NG) had committed to making available associated gas for production of two Lakh Tonnes Per annum (TPA) of Ethylene. An agreement was signed between Oil India Limited (OIL) and RAPL on October 19, 2000 for the supply of 5 Million standard Cubic meter (MMSCMD) of gas, which was considered adequate for production of 1.30 lakh TPA of Ethylene. The remaining gas was to be supplied by Oil and Natural Gas Corporation (ONGC). ONGC agreed to make availale 1.35 MMSCMD of gas. However, due to declining quantity/quality (due to the age of the oil wells) of gas from ONGC, it was found to be adequate for 28,000 TPA of Ethylene for the first five years and 15,000 TPA for the remaining period of 10 years that is a total of 1.80 TPA of Ethylene. RAPL felt that a project below two lakh TPA of ethylene would not be viable and they insisted on adequate gas for production of 2 lakh TPA of ethylene.

The Ministry of P and NG considered the matter further and agreed to supply LPG through the Indian Oil Corporation (IOC) to make up for the shortfall in the suply of gas. The subsidy over a period of 15 years worked out to more than Rs 6673 crores ( for capital, infrastructure and feedstock subsidy).

He said the project was finally been approved by the Centre in April 2006. However, the Ministry of P and NG and GAIL wanted additional comfort for the feedstock suppliers for this project over and above those approved by Government.

A joint venture company was formed under the name " Brahmaputra Crackers and Polymers Limited" which has been incorporated in January, 2007 for implementation of this project, with GAIL having 70 per cent equity participation, OIL, Numaligarh Refinery Ltd and AIDC each owing ten percent equity stake in the project. On the issue of additional comfort of feedstock supplies, the PIB on February 12, 2007 deliberated on the supplementary note, seeking approval for additional support from the changed project parameters like escalation in operating costs, increase in interest rate, non-availability of exemption by Government of Asom on works contract tax and increase in IRP, forwarded by the P and NG.

He said the PIB recomended amongst other things that the project may be implemented expeditiously in terms of the parameters approved by CCEA, feedstocks suppliers shall execute feedstock supply agreements with JVC immediately.

UNI