NEW DELHI, July 22 ? The Union Petroleum and Natural Gas Ministry has clarified that the issue of funding the subsidy for LPG to make up for the shortfall in feedstock for the mega gas cracker project was yet to be sorted out. Uncertainty over implementation of the Project continues even as Gas Authority of India Limited (GAIL) has shown keen interest to take up the Project. However, the Union Minister did not mention the possibility of the Project being handed over ro GAIL.
LPG would be supplied by Indian Oil Corporation (IOC) to make up for the shortfall in the supply of gas. Substantial funds would be required for giving subsidy to the oil companies. Funding of subsidy required is to be sorted out, he said. It may be mentioned here that in a fresh bid to break the deadlock, the Petroleum Ministry asked GAIL to look afresh at the feasibility of the Project.
After studying the techno-economic feasibility, GAIL has indicated that it is interested to take up the project provided some more incentives in addition to those already sanctioned were provided by Government of India. The Reliance Assam Petrochemical Limited (RAPL) signed an agreement with Oil India Limited for supply of 5 MMSCMD of gas. But ONGC agreed to make available only 1.35 MMSCMD of gas, landing the Project in trouble. The original Letter of Intent that was issued to Assam Industrial Development Corporation (AIDC) was for setting up 3 lakh Tone Per Annum of ethylene gas cracker project. The LoI was subsequently transferred to RAPL and capacity of the project was brought down to 2 lakh TPA because of scarcity of gas in the State.
Meanwhile, the Central Government in 1994 and 1997 have approved various incentives and concessions for the Project which included supply of feedstock at a concessional and fixed rate of Rs 600 per thousand cubic meters of gas, Sri Aiyar said.
Meanwhile, the Petroleum Minister has argued that the gas flaring in Assam was mainly due to technical reasons and from small and isolated fields, which are not economical to integrate with main gas grid for utilisation.
However, various steps have been taken to reduce gas flaring in Assam. The steps included installation of low pressure booster compressors, getting new fields connected to gas network and looking for small customers near the isolated fields.