NEW DELHI, March 1 ? Infuriated by the delay in resolution of the logjam over implementation of the mega gas cracker project, Assam Government is likely to explore the possibility of handing over the project to public sector oil company. As a first step in this direction, Chief Minister, Tarun Gogoi today held discussions with Members of Parliament (MPs) belonging to Assam this evening to consider all pros and cons. A dinner meeting was hosted by Chief Minister to felicitate an interaction on the gas cracker project and the financial crisis with the State?s 21 MPs belonging to both the Houses of the Parliament.
Earlier, talking to this newspaper, Sri Gogoi hinting that the State Government has run out patience disclosed that a meeting with the all the public sector oil companies would be called by Assam Government shortly to explore the possibility of transferring the Rs 3,700 crore project from the current promoter Reliance. The proposal mooted once earlier also is being considered seriously this time, as there has been no forward movement on breaking the deadlock. The meeting proposed by the Chief Minister would help the State Government to gauge the mind of the public sector oil companies on the project.
Two oil companies including the Oil India Limited (OIL) and Oil and Natural Gas Corporation (ONGC) are already involved with the project and are the main supplier of the feedstock. The Chief Minister, meanwhile, said that though he has been assured at the highest-level that the Union Cabinet would shortly consider the enhanced financial requirement for the project, he has decided to explore all other possibilities. The need for additional financial commitment has arisen because of the decision to use LPG as feedstock to make up the deficit supply of gas. But question that hangs over State Government is whether the oil PSUs would be keen to take up the project. The Petroleum and Natural Gas Ministry has already explored that possibility by entrusting the Gas Authority of India (GAIL) to conduct an independent assessment of the project.
Although, it is not yet clear as to why the Petroleum Ministry wanted a second assessment study of the project at this stage, indications were that Petroleum Ministry was preparing to have GAIL stand by to take over the project GAIL, meanwhile, had the Engineers India Limited (EIL) conduct the study. According to sources in the Petroleum Ministry, GAIL has now indicated that as per a feasibility report submitted by EIL, the project is not a viable proposition.
The project has ran into rough weather after it was found that there is not enough gas out of the Assam fields to support a two-lakh-tonne-per-annum ethylene plant. The shortfall was initially planned to have been made up by using naphtha but later it was decided that LPG should be used as an additional feedstock. It has now been found that there would be a huge subsidy component involved for providing gas and LPG to the project at concessional rates.
According to Petroleum Ministry?s calculation, the gas cracker project would create a turnover of around Rs 617 crore annually on which the yearly feedstock subsidy would be in the order of Rs 370 crore for the first seven years and Rs 430 crore for the rest of the project period. The amount would be over and above the one-time capital subsidy of Rs 377 crore that has already been promised to the project. Meanwhile, the Chief Minister said that he wanted the State?s MPs to first concentrate on the twin issues of implementation of the gas cracker project and the State?s perennial financial crisis.