GAIL promises better than Reliance on Assam cracker

Vol 10, PW 8 (10 Aug 06) Midstream & Downstream

GAIL is doing everything within its power to prove that it can do better than Reliance Industries in Assam.

At stake is the long pending and much modified gas cracker project that should have been executed by Reliance more than a decade ago, but which has singularly failed to emerge. Today, Reliance is out of the project, replaced by GAIL.

Proshanto Banerjee, GAIL chairman, is taking a keen personal interest in developments and has asked colleagues to go ahead at "maximum speed" to implement the project, estimated to cost Rs5460cr ($1.2bn). GAIL has 70% equity in the project to set up the cracker at Lepetkata in Dibrugarh district, with Oil India, Numaligarh Refinery and the Assam Industrial Development Corporation each holding 10%.

PETROWATCH learns Banerjee has told GAIL officials working on the project to sort out joint venture formalities within this month (August) come what may, and move into Lepetkata to start construction by the end of the monsoon. Why is Banerjee so keen He is enthusiastic about a new range of products that GAIL will get from the cracker, says a source.

Polypropylene excites him the most." Banerjee had hoped to get polypropylene from Haldia Petrochemicals but GAILs proposed equity investment in that project was aborted, something that reportedly upset him. Banerjee feels that West Bengal (his home state) is not a friendly place for GAIL to invest, adds a source.

He feels Assam is more welcoming and has decided to focus on the gas cracker project. Banerjees enthusiasm is well founded.

Assam authorities have told GAIL that land for the cracker has already been acquired and will be handed over within a month. Himansu Das, finance secretary, government of Assam, tells us the project will make a profit in the first year itself as Delhi has promised a subsidy of nearly Rs2200cr.

"We share GAILs optimism about the project, says Das.