Scheme Description

The Assam Gas Cracker Project (AGCP) was initiated in pursuance of the Memorandum of Settlement signed by the Central Government with the All Assam Students Union (AASU) and All Assam Gana Sangram Parishad (AAGSP) on 15th August, 1985. The AGCP, located at Lepetkata, Dibrugarh dist., was approved by the Cabinet Committee on Economic Affairs (CCEA) on 18th April, 2006. A joint venture company, namely M/s Brahmaputra Cracker & Polymer Limited (BCPL), was incorporated on 8th January, 2007 to implement the project. The Project was commissioned on 2nd January, 2016 at a cost of Rs. 9965 crore and was dedicated to the Nation by the Hon’ble Prime Minister, on 5th February, 2016.

Vide a decision of CCEA in its meeting held on 24.12.2019, the administrative control of BCPL was transferred from Department of Chemicals and Petrochemicals, Ministry of Chemicals and Fertilizers to Ministry of Petroleum and Natural Gas. The plant has been operating at more than 100% capacity since last three years and the same trend is continuing in current year.

BCPL has established its product brand in the market with growing credibility amongst customers. With GAIL India Limited, the holding company as the sole marketer in accordance with a marketing arrangement, the products & by-products are being sold in the north eastern region and beyond to West Bengal, Jharkhand, Bihar, Uttar Pradesh, Delhi, Orissa, Andhra Pradesh, Telengana, Tamil Nadu to downstream industries with increasing market share. Efforts are on to increase the market share in the northeastern region to maximize realization.

Feedstock Subsidy to BCPL

The production capacity of the Project as a standalone Petrochemical Complex is lesser than a typical integrated Petrochemical Project. Secondly, the economics of the project is heavily dependent on the prices of polymer, naphtha and natural gas. In view of the sub-optimal capacity, the CCEA while approving the Assam Gas Cracker Project (AGCP) in 2006, inter alia, accorded approval for feedstock subsidy of Rs. 908.91 crore for the project spread over 15 years operation period. The CCEA in November, 2011 approved the revised cost estimate of Rs. 8920 crore for setting up of the AGCP and the gas price considered in the approval was the North East Concessional Price.

The requirement of feedstock subsidy for the project was also deliberated by an Inter-Ministerial Committee (IMC) in 2013 and again in 2016 and recommended for in-principle approval for NER concessional price i.e. 60% of prevailing market gas price for 15 years of plant operations, along with an annual review to ascertain feedstock (natural gas) subsidy requirement based on gas, naphtha and polymer prices to ensure minimum IRR of 10%.

Based on the above justification and considering that subsidy/ concessional price was already as part of previous CCEA approvals, the CCEA in its meeting held on 24.12.2019 approved the feedstock subsidy for the project (BCPL) for 15 years of plant operation from commissioning date.

Scheme Details

The Feedstock Subsidy to BCPL is a Central Sector Scheme of Ministry of Petroleum and Natural Gas. The yearly subsidy is a function of Polymer price, Gas price and Naphtha price while maintaining minimum post tax IRR of 10%. The methodology for computing yearly subsidy has been approved by the CCEA.

The detail of feedstock subsidy claimed and released by Government of India is given below:

Scheme Performance

The feedstock subsidy has provided this sub-optimal capacity plant a level playing platform and compete in the domestic market. The viability of this ambitious project of the Government of India has improve after the approval of feedstock subsidy in the following manner: