One of the major hurdles in the path of the Assam gas cracker project seems to have been cleared. The Public Investment Board (PIB) has cleared a pooling mechanism to compensate for higher feedstock prices. The pool is to be created out of the additional revenue projected to be earned when the price of polymers manufactured by the Project exceeds Rs 40,000 per MT. The PIB has accepted the proposal to consider sanctioning additional budgetary subsidy, to the pool account after every five years to the Project. An additional subsidy of Rs 800 crore spread over a 15-year period is expected from the Union Government.
The PIB, reserved the right to review the feedstock subsidy and other project parameters six months before the commissioning of the project, slated to take 60 months from the date of start of work. The project would now be executed in terms of parameters laid down by the Cabinet Committee on Economic Affairs (CCEA).
Earlier, NRL has demanded parity in naphtha price to the extent of cost of crude payable by NRL to OIL and ONGC. NRL has projected a cost of Rs 27,000 for a ton of naphtha citing an estimated annual loss on sales to the cracker of Rs 200 crore. ONGC and OIL have also demanded an increase in gas price from Rs.3200 per mscm to Rs.4, 000 per mscm, as well as escalation in gas prices at the rate of 2.5% pa.
The extra money from the Pool is proposed to go to Numaligarh Refinery Limited (NRL), for payment of price of naphtha. The two oil companies OIL and ONGC are also likely to get a share. The PIB has asked feedstock suppliers to immediately execute feedstock supply agreements with the joint venture - Brahmaputra Cracker and Polymer Company Limited.
If this pool account is not able to meet the projected cost, then the Government of India would provide additional budgetary subsidy, but after a period of every five years from the date of production, additional budgetary subsidy may be given to the JVC.
19-Feb-07 
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