Assam gas cracker project is nearing completion and efforts are on to ensure its commercial viability. The project, part of the Assam Accord signed in 1985, is implemented by the subsidiary of Gail India, Brahmaputra Cracker and Polymer Ltd (BPCL) and has suffered a series of cost and time overruns. As per the latest available information the project is estimated to cost Rs. 8920 crore and is targeted for completion by December 2013.
Assam Gas cracker project is getting variety of concessions but experts are still skeptical about its success. The Inter-Ministerial Committee has endorsed recommendation from the Public Investment Board that BCPL should be given the first right of refusal on any additional gas coming from the North East Region. This proposal if approved by the Cabinet Committee on Economic Affairs Empowered Group of Ministers (EGoM) will solve gas woes of the project. BCPL will be able to replace naphtha with natural gas which in turn will improve its IRR.
The inter-ministerial committee has also recommended the extension of concessional gas price applicable to North East to Assam Gas Cracker project too. It should be noted that APM consumers in the North East pay only 60% of the APM gas price being charged in the rest of the country. However the lower gas price will translate into a gas subsidy of Rs.9,734 crore for the government. Despite such a whooping subsidy bill the project may not break even before 2022.
BCPL also faces problem of evacuating the final products. Gail, the main promoter, is demanding 2.4% of the net sale realization as selling and distribution expenses. Thus BCPL is facing problems both pre and post implementation of the project.
