India’s Brahmaputra petchem project hit by delays, cost overruns

15 March 2012 06:15  [Source: ICIS news]

By Ajoy K Das

Brahmaputra River in Assam province, IndiaKOLKATA (ICIS)--Brahmaputra Cracker and Polymers Limited (BCPL) will miss its revised commissioning date of December 2013 for its petrochemical project in northeastern India because of delays in implementation and cost overruns, a company official said on Thursday.

According to a document filed by the company with India’s Ministry for Chemicals and Fertilizer, estimates of the project cost have increased by 64% to $1.79bn (€1.38bn) from $1.09bn.

The Indian government last month sanctioned to nearly double its capital subsidy to the principal promoters of BCPL to $940m from the original $492m, to bridge the higher funding requirement of the project.

BCPL’s cracker and polymer complex under construction at Lepetkata in Assam province would include a 220,000 tonne/year high density polyethylene (HDPE)/linear low density polyethylene (LLDPE) swing plant, and a 60,000 tonne/year polypropylene (PP) plant.

The project is also expected to produce 55,000 tonnes/year of raw pyrolysis gasoline and 12,500 tonnes/year of fuel oil. A combination of naphtha and gas will be used as feedstock for production.

GAIL India Ltd, Oil India Ltd, Numaligarh Refinery Ltd (NRL) and the Assam Government are the principal promoters of BCPL, which is christened after the Brahmaputra River cutting across Assam. GAIL has a 70% stake in BCPL, while the other three equally hold the remaining 30%.

BCPL has concluded agreements with Oil India and ONGC (Oil and Natural Gas Corp) for gas supply of six million metric standard cubic metres per day (6mmscmd), and 1.35mmscmd, respectively. NRL, meanwhile, has agreed to supply BCPL 160,000 tonnes/year of naphtha.

Project construction, which started in April 2007, is 59% complete as of December 15, 2011. The project was originally expected to be completed in five years’ time and slated for commercial operations in mid-2012, but the start-up schedule was eventually revised to December 2013.

“Though current work progress was satisfactory, the project may face more delays in the future,” the BCPL official said.

“Ever since the project started, we have lost 200 days from industrial strikes, work stoppages by workers, rains and other factors,” the official said.

On March 2, a construction worker was shot dead and several others were injured in a firing by central government security forces deployed at the project site at Lepetkata, triggering a five-day stoppage of work. The incident has taken political overtones with several political parties demanding replacement of central government security forces with local police, claiming latter would be more sensitive managing conflicts with the local population.

According to a project status report, as at end-2011, various turnkey jobs relating to engineering and procurement of plants have yet to achieve completion.

Award for procurement of technologies have been completed relating to main processing unit for the cracker, basic engineering designing of HDPE/LLDPE and polypropylene, ethylene (C2) and C3 (propylene) separation and support utilities.

($1 = €0.77)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Ajoy K Das
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