NEW DELHI, Aug 20 ? Uncertainty and indecision on implementing the mega Gas Cracker Project has left the Parliamentary panel incensed, forcing it to direct the Ministry of Chemical and Fertilizers to furnish a detail action taken report to executive the project within a month. According to the latest estimate even if the issue of feedstock supply is resolved, it is expected that nearly four years would be needed for implementation of the project.
Vagueness continues to cloud the Rs 3,700 crore Reliance Assam Gas Petrochemical Limited (RAPL) setting back the project by over two decades. Since 20 years have already passed, the Government should make real and serious efforts to complete the Project by settling the question of providing subsidy without any further lose of time, the Parliament Standing Committee attached to Ministry of Chemical and Fertilizers observed.
The feasibility of implementing this project through another public sector undertaking such as Gas Authority of India Limited (GAIL) should also be explored seriously with a sense of urgency. The Committee desires that it should be appraised of the concrete steps taken within one month of presentation of the report, it was directed.
Notwithstanding the sense of urgency expressed by the Parliamentary Panel, the fate of the Project hangs in balance, as the Union Government still wants Assam Government to keep its options open about setting up some alternate project. The latest on the Project according to the information made available to the Parliamentary Standing Committee by the Ministry was that it was still waiting for a report from the Union Ministry of Finance on total financial implication of the project.
The Committee of Secretaries headed by the Union Cabinet secretary constituted to examine the gas cracker project asked the for latest comments of the Ministry of Finance and Ministry of Petroleum and Natural Gas. The Finance Ministry in turn sought a report from GAIL, which has since submitted a proposal for setting up the project.
The contentious issue of subsidy was discussed in the Ministry of Finance, the Panel was told. Since a substantial amount of subsidy was involved, the Ministry estimated that around Rs 6,000 crore would be required over a period of 15 years, questions were raised about viability of the Project.
In its last action taken report submitted to the Parliamentary Panel last December it was told that the Committee of Secretaries, in which all concerned Secretaries were involved examined the question of subsidy. The Committee?s recommendation was sought on subsidising the supply of LPG at the rate of Rs 600 per thousand cubic metre of gas for production of 2 lakh TPA of ethylene over a period of 15 years and to determine the modalities of release of funds.
The 51st Action Taken report submitted last fiscal had recommended constitution of a Committee of Secretaries and directed that Cabinet Secretariat be made the nodal agency for resolving all outstanding issues including finalisation of the gas supply agreement. But all the developments so far has happened only on paper as two critical components of the project? acquisition of land and signing of LPG supply agreement between RAPL and Indian Oil Corporation Limited (IOCL) are yet to happen. Meanwhile, came the proposal of handing over the project to GAIL.
The cost of subsidy that has put off the Project hangs like a sword over it. The price of natural gas is Rs 1,700 per thousands cubic metre for the North-east and for the general consumer it is priced at Rs 2,850 per thousand cubic meters. The concessional gas price applicable to the consumer in the North-East in 1994 was Rs 1,000 per thousand cubic meter of gas with a further discount of Rs 400. However, this rate was valid till December 1995.
Later the Union Cabinet decided to make available the gas at the fixed rate concessional rate of Rs 600 per thousand cubic meter for production of 2 lakh tons of ethylene per annum for 15 years.
The IOCL was proposed to be brought in to supply LPG to meet the shortfall in the supply of gas. But a major hurdle was that the cost of LPG, which was very high and a substantial subsidy would be required to be paid to the IOCL. They are yet to sign gas supply agreement with RAPL, as the issue of subsidy is yet to be settled.
According to the gas supply agreement signed with Oil India Limited (OIL) it is to supply 5 mm scmd of gas, while the signing of a similar agreement is yet to be signed with ONGC for supply of 1.35 mmscmd. The RAPL claims that with the quality and quantity of gas proposed to be supplied by ONGC, it wouldnot be able to produce 70,000 tons of ethylene, as envisaged.