New Delhi, June 28: State-owned ONGC's long-delayed mega petrochemical plant at Dahej in Gujarat will be commissioned next month but at a 27 per cent higher project cost of Rs 27,011 crore.

"Pre-commissioning activities have started at Dahej. The project has achieved an overall progress of 94 per cent against the scheduled 100 per cent and commercial operation is likely to start in July," a senior ONGC official said.

ONGC had set up ONGC Petro-additions Ltd (OPaL) in 2006 for building a mega petrochemical complex at Dahej in Gujarat.

ONGC holds 26 per cent in OPaL with gas utility GAIL (India) Ltd holding 19 per cent and Gujarat State Petroleum Corporation 5 per cent. The remaining 50 per cent is to be either given to a strategic investor or offered in an initial public offering.

The plant was planned to come on stream by 2012 but delays have led to two revisions in completion dates.

The project was initially approved at a cost of Rs 15,870 crore in December 2008.

However, the addition of some units took the project cost to Rs 19,535 crore in June 2010. Again, in August 2012, with the addition of the captive power plant, the cost escalated to Rs 21,396 crore.

The higher cost is because of an interest payout during construction along with margin money and other preliminary expenses estimated at Rs 2,483 crore. The interest payout is seen at Rs 709 crore. Foreign exchange losses worth Rs 460 crore also mounted costs.

OPaL will produce polymers, which will be used to manufacture packaging films, besides milk jugs, detergent bottles, margarine tubs, garbage containers and water pipes. It will also produce chemicals for making plastics.

The growth will be driven by demand from automobiles, packaging, agriculture and infrastructure sectors.

Multiple products

The OPaL project includes a dual feed cracker unit with a capacity of 1.1 million tonnes (mt) per year of ethylene and 400,000mt of propylene.

Associated units include a pyrolysis gasoline hydrogenation unit and butadiene and benzene extraction units.

Moreover, OPaL is setting up a high-density polyethylene and a low-density polyethylene unit, each with a capacity of 360,000mt per annum.

OPaL is looking to export to Africa, China, Singapore, Turkey, Pakistan, Vietnam, Malaysia, Bangladesh, Indonesia and Sri Lanka.