GAIL to implement Assam gas cracker project

With the recent approval of the cabinet committee on economic affairs (CCEA), GAIL India Ltd has announced that GAIL-led joint venture company (JVC) will implement the Rs 5,460.6 crore Assam Gas Cracker Project. To be set-up at an integrated petrochemical complex at Lepetkata, in Dibrugath, the project will be implemented by a joint venture company, with GAIL having a 70 per cent equity participation. The remaining 30 per cent equity will be shared equally among OIL, NRL and the state government of Assam. The project will be completed in 60 months from the date of approval.

The project is expected to create local employment as a result of investments in downstream plastic processing industries and allied ventures. According to estimates, about 500 plastic processing units are likely to come up in the North Eastern region if this project becomes operational. The government of Assam has agreed to grant exemption from entry tax on capital goods, exemption from works contract tax during construction and sales tax / VAT exemptions on feedstock and products for 15 years from the date of commencement of production.

The feedstock for the petrochemical complex is 6.0 MMSCMD gas from Oil India Ltd, Duliajan and 1.35 MMSCMD gas from ONGCL till March 31, 2012, and 1.00 MMSCMD thereafter. The petrochemical complex will also utilise 160,000 TPA of petrochemical grade naphtha from Numaligarh Refinery Ltd (NRL).

The petrochemical complex will comprise of a cracker unit, downstream polymer and integrated off-site / utilities plants. The complex has been configured with a capacity of 220,000 tons per annum (TPA) of ethylene and 60,000 tons per annum of prop and natural gas and naphtha as feedstock. The government of Assam has identified the site and necessary environmental clearance has been obtained.

The existing GAIL LPG plant at Lakwa will be modified to process gas for recovery of ethane and higher hydrocarbon fraction which will be transported to Lepetkata through a pipeline.

The products from the petrochemical complex will be 220,000 TPA of HDPE / LLDPE, 60,000 TPA of polypropylene, 55,000 TPA of raw pyrolysis gasoline and 12,500 TPA of fuel oil.

The Assam Gas Cracker Project was proposed as a part of the implementation of Assam Accord signed by centre on August 15, 1985. Subsequently, a letter of intent was issued to Assam Industrial Development Corporation (AIDC) in January 1991. In February 1997, the letter of intent was transferred to Reliance Assam Petrochemicals Ltd (RAPL), a joint venture company of Assam Industrial Development Corporation and Reliance Industries Ltd, for which RAPL was granted various concessions by the central government for implementing the gas cracker project.

However, the work could not be started due to non-availability of sufficient feedstock and other reasons.

On February 20, 2003, the ministry of finance decided that the company would examine the feasibility of taking up the Assam Gas Cracker Project on its own. The company would also indicate the assistance required from other PSUs and the government of India for setting up the project. The company engaged the services of Engineers India Ltd (EIL) to work out project viability.

A pre-feasibility report (PFR) for the project was prepared considering an integrated petrochemical complex. Thereafter, a detailed feasibility report (DFR) was prepared by GAIL and EIL. The financial appraisal of the project has been carried out by IFCI Ltd.