The Gas Cracker at Last

At long last, the first stage of the Assam gas cracker project was commissioned at Lepetkata last week and the second stage will also start production in about two weeks’ time. “The cracker, polypropylene unit, gas processing unit and all utilities have been commissioned,” B.C.Tripathi, chairman and maging director of GAIL told newsmen in New Delhi last Sunday. The plant has started producing ethylene, which will form the feedback for manufacturing polymers that are basic building blocks of plastics. It will produce 280,000 MT of feedstock for downstream industries.
The gas cracker project of Assam has stood as a sort of icon for the State’s industrial development. This is a State where petroleum- and tural gas-based industries are so important that knowledgeable circles have had good reason to lament the fact that the gas cracker project of Assam was kept pending for decades. There was a phase of about two decades when the tural gas of the State was flared day and night merely because no one had planned for the use of the gas at the right time. The estimated loss during that period has been calculated at anything between Rs 38 lakh to Rs 42 lakh every day. When Oil India Ltd first mooted the gas cracker project, its estimated cost was only about Rs 800 crore. Thereafter, we have witnessed a series of postponements and one abandonment of the project midway despite the fact that the Assam gas cracker project was also a part of the Assam Accord commitments of 1985.
Knowledgeable circles are of the view that the postponement of the Assam gas cracker project was deliberate in order to protect the interests of two other such projects that had already been started at Haldia and Auriya. They were afraid of the competition they would have to face when the gas cracker plant of Assam with its special subsidies and tax exemptions came up. Be that as it may, the cost of the gas cracker unit kept increasing From Rs 800 crore to Rs 3,000 crore to Rs 5,460 crore and to the fil estimated cost of Rs 9,285 crore. The actual cost was of the order of Rs 10,000 crore. The Centre has sanctioned a capital subsidy of Rs 2,136 crore and a feedstock subsidy of Rs 908.91 crore for a 15-year period for the project with an exemption of excise and income tax for 10 years. The GAIL and the Brahmaputra Crackers and Polymers Limited (BCPL)—the me under which the gas cracker project has been christened—have already signed a deal for marketing petrochemical products sold at the plant. The BCPL will produce a range of polymers that will find application in sectors such as packaging, film, injection, raffia and blow moulding. The feedback for the project will be tural gas and phtha. The OIL and ONGC will supply tural gas, while phtha will be supplied by NRL.
While there are strong hopes pinned on the Assam gas cracker plant for kick-starting industrial development in the State, there are also genuine fears that what had been envisaged about the gas cracker plant giving rise to and feeding a whole range of downstream plastic industries, may not actually come about for the simple reason that the State government has not put in the requisite preparation for initiating such an industrial revolution based on polymers. As a result, what might really happen is that much of the feedstock produced by BCPL could well be just sold as feedstock to plastic industries located in States like Maharashtra, Gujarat, Andhra Pradesh, Tamil du, Kartaka, Punjab and Harya. This will completely defeat the purpose for which the gas cracker plant was set up in Assam: as a catalyst for industrial development of the State. The State government must, therefore, ensure that all kinds of technical and entrepreneurial assistance will be provided to those planning to set up plastic industries in the State. If anything, everyone connected with industrial development in the government must bend over backwards to ensure that the feedstock of the BCPL remains within the State and is fully utilized by State-based industries. Since it may not be possible to ensure complete consumption of the feedstock within the State and the region in the first few years, the State government and the Centre must find ways of monitoring that all export of the BCPL’s feedstock to industrial units in other States is strictly monitored and is governed by short time-bound contracts that do not extend beyond a year. This should give the State government time to execute plans for downstream plastics industries in the State that it should have done long ago but did not.