Brahmaputra Cracker and Polymer Ltd (BCPL), also known as Assam Gas Cracker Project, has achieved financial closure with a consortium of banks led by Punjab National Bank.
Chemicals and fertilizers ministry officials said loan arrangements for Rs 156 crore over and above the capital and feedstock subsidy from the government had been signed.
BCPL project is a flagship petrochemical project of the Centre for the north-east region and is expected to increase capacity of polyethylene (PE) by 2,20,000 tonnes per annum (TPA) and polypropylene by 60,000 TPA.
However, the commissioning of the project has been delayed by 15 months to July 2013 against the earlier deadline of April 2012.
Several factors including inclement weather, labour unrest, below par performance of contractors, award of process technology licensors and poor response of bidders have been attributed for the delay.
Subsequently, the project has scaled down its business plan projection for 2010-2011 from an earlier estimate of Rs 2,272 crore to Rs 1,950 crore, including equity of Rs 253 crore, capital subsidy of Rs 792 crore and loan of Rs 904 crore. Cumulative expenditure of the project is was Rs 1,391 crore. The overall project progress, according to ministry officials, is 28.4 per cent against the cumulative schedule target of 54.5 per cent.
Till date, the department of chemicals under the ministry of chemicals and fertilizers — the nodal ministry for the petrochemical project — has released Rs 37 crore for the financial year 2007-08, Rs 100 crore for FY 2008-09 and 316.31 crore for FY 2009-10. For the year 2010-11, while the ministry released the entire budgetary amount of 212.7 crore, the actual allocation went up to Rs 791.7 crore that includes additional allocation of Rs 579 crore. As a consequence, the department has released a total of Rs 966.5 crore towards capital subsidy of which Rs 512.7 crore has been released in 2010-11.
Officials said the project will use both naphtha and gas to ensure that petrochemical production is not hit by volatility of crude oil globally. While Oil and Natural Gas Corporation will supply natural gas, naphtha will be supplied by Numaligarh refinery.
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It will be a great relief to the petrochemical sector in the region, since the operations of the other company in Eastern zone, Haldia Petrochemicals, is entirely naphtha based which being a derivative rude is quite volatile, both in price and supply, official sources added.
While Gas Authority of India Ltd is the main promoter of the Assam Gas cracker project and holds 70 per cent stake, Oil India Ltd, Numaligarh Refinery Ltd and Assam Industrial Development Corporation, Government of Assam, are the other promoters.