Indian government offers fresh capital subsidy to BCPL project

26 November 2012 07:38  [Source: ICIS news]

KOLKATA (ICIS)--The Indian government is providing an additional capital subsidy of $120m-150m (€92m-116m) to Brahmaputra Cracker and Polymers Ltd’s (BCPL) project to prevent further time and cost overruns, an official in Ministry of Chemicals and Petrochemicals said on Monday.

“The government has already sanctioned an increase in capital subsidy to $940m from $490m to bridge cost escalations in implementing the project. The fresh capital subsidy was to enable BCPL to make adequate provisions and prevent any further delays in commissioning [on July 2013],” the official said.

“Early next year the government will review project implementation and achievements of milestones set for it. Based on the review, the capital subsidy would be made available to BCPL in next financial year starting April 2013,” the official added.

The gas cracker and polymer project had already suffered a cost escalation to $1.79bn from $1.09bn since construction work started in 2007 and the Ministry would offer all support to enable the company to stick to the commissioning date which had already been revised thrice, the official said.

The government was aware of adverse environment of the project’s geographical location and susceptible to vagaries of nature, industrial and ethnic unrest and logistical hindrances faced by vendors. Considering the economic multiplier impact of the project in the region, governmental subsidy was an economic necessity, according to the official.

The BCPL project includes a cracker and polymer complex which is located at Lepetkata in northeastern Indian province of Assam with a 220,000 tonne/year high density polyethylene (HDPE)/linear low density polyethylene (LLDPE) swing unit, a 60,000 tonne/year  polypropylene (PP) plant, a 55,000 tonne/year raw pyrolysis gasoline (pygas) plant and a 12,500 tonne/year of fuel oil plant based on naphtha and gas as feedstock from Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL).

BCPL’s principal promoters are GAIL India Ltd, OIL, Numaligarh Refinery Ltd (NRL) and the Assam government, with GAIL India Ltd owning 70% stake and the rest owning 10% stake each.

($1 = €0.77)

By: Ajoy K Das
+65 6780 4359

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