Assam Gas Cracker project cost escalates over 53 per cent to Rs8,920 crore

The Assam Gas Cracker project is now estimated to involve fixed cost of Rs8,920 crore against its original estimate of Rs5,460.61 crore as approved by the cabinet committee on economic affairs (CCEA) in 2006 – a 63.35 per cent escalation in project cost.

The ambitious project is part of the Assam Accord signed in 1985. Its initial cost was Rs 3600 crore, when the first MoU was signed between the former promoter, Reliance Industries Ltd and the state government in 1994. After RIL pulled out of the project, it was given a fresh lease of life in 2006 and the estimated cost escalated to Rs5,461 crore.

The project was declared a joint venture with Gas Authority of India having 60 per cent share, and Numaligarh Refinery Ltd, Oil India Ltd., Indian Oil Corporation and Assam Industrial Development Corporation with 10 per cent equity each.

Prime Minister Manmohan Singh laid the foundation stone of the project in 2007 at Lepatkata in Dibrugarh district and specified a deadline of five years for completion of the project.The project was renamed the Brahmaputra Cracker and Polymer Ltd (BCPL) a few months back. The date of completion was rescheduled to July 2013, a delay by 15 months from the date announced by the prime minister.

The CCEA has now approved the revised cost estimates of the project, which would be funded by capital subsidy of Rs4,690 crore and debt and equity of Rs2,961 crore and Rs1,269 crore, respectively.

The revised cost estimates of Rs8,920 crore is based on a 10 per cent internal rate of return and a debt equity ratio of 2.33:1 and pro rata infusion of equity and capital subsidy before drawdown of debt.