The Telegraph
Since 1st March, 1999
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No end to Assam gas cracker jinx

New Delhi, Nov. 3: Assam’s gas cracker jinx continues.

A fortnight has elapsed since GAIL (India) Ltd, Numaligarh Refinery Ltd (NRL), Oil India Ltd and Dispur inked a joint venture agreement to fulfil the state’s gas cracker dream, but the project remains entangled in a row over feedstock subsidy and problems in acquisition of land.

Feedstock for the gas cracker plant includes naptha and natural gas, to be supplied by NRL and GAIL. On the other hand, the Assam government is required to arrange for 1,009 acres at Lepetkata in Dibrugarh, but hasn’t been able to complete the process because of opposition from residents and some organisations.

Representatives of GAIL, the Assam Industrial Development Corporation, NRL and OIL had a heated discussion on the issues delaying the project at a meeting convened by the secretary of chemicals and fertilisers in the capital today.

Sources said NRL’s insistence on increased feedstock subsidy to offset estimated losses was a spanner in the works. The company is understood to have projected a Rs 200-crore loss if there is no increase in subsidy.

GAIL, too, reportedly raised questions about how to go about implementing the project, for which four names were proposed today. One of the suggested names is Brahmaputra and Assam Gas Cracker Project.

The two public-sector giants, who together hold an 80 per cent stake in the Rs 5,640-crore project, want a price escalation clause that will ensure an annual step-up of 2.5 per cent in the price of naptha. They have been insisting on the inclusion of this clause in the original agreement before work begins.

All things remaining the same, the project is expected to begin only in the next fiscal.

The secretary of the ministry of chemicals and fertilisers reportedly expressed disappointment over the fact that a note on changes in the agreement has to be sent to the Public Investment Board and, consequently, the cabinet once again. The cabinet had cleared the project in March.

What it amounts to is a tug-of-war between veteran Assam politician B.K. Handique’s chemicals and fertilisers ministry, which wants the project to start in a jiffy for obvious reasons, and the petroleum ministry, which is looking at it “from a commercial perspective”.

The result is that the project, committed by Delhi in the Assam Accord of 1985, is still to be brought out of government files. Reliance was to execute the project but it did not work out for a variety of reasons, a dispute on subsidy being one of them.

This year, despite doubts about the profitability of the project, it was felt that Assam needed it and the Prime Minister — a Rajya Sabha MP from Assam — stepped in to see it past the cabinet.

Of the 1,000-odd acres of land required for the project, Dispur has acquired only 300 bighas. Chief secretary S.Kabilan made the announcement. “The rest will be acquired by December,” a source said.

Dispur’s failure to speed up acquisition of land has already provoked negative comments in Handique’s ministry about chief minister Tarun Gogoi’s “seriousness”.

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