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Allís Well That Ends Well Talking
Allís Well That Ends Well Talking exclusively to CEW, P N Prasad, Managing Director, Brahmaputra Cracker & Polymers Ltd (BCPL) , informs that the project has already achieved 93 per cent of physical progress. He shares insights into the project and how commissioning of the cracker will transform the socio-economic conditions of the North Eastern region of country making it a much sought-after destination for the plastic processing industry. share their perspective.

Please apprise us of the current status of the gas cracker project?
As on 15th of July the gas cracker project has already achieved overall physical progress of around 93 per cent against the cumulative target schedule of 99.8 per cent. Approximately 99.2 per cent of manufacturing and delivery has been completed. We have achieved 100 per cent completion of site development jobs and infrastructure development and major parts of civil and structural works for complex are nearing the completion stage. Mechanical works are going on in full swing and we have already erected 857 out of total 1091 number of equipment for the cracker project.
As approved by CCEA, the project will attain mechanical completion by July 2013 and the commissioning by December this year. We have already started pre-commissioning and commissioning activities for gas dehydration unit at Duliajan plant, 48 KMs (18Č) Duliajan- Lepetkata gas pipeline, utilities and offsites, 56 MW Captive Power Plant and Gas Sweetening/C2+ recovery unit at Lepetkata.

Has BCPL evaluated the cost escalation factors and its impact on overall project economics? How are you raising the extra funds required for project completion?
Detailed Feasibility Report (DFR) of BCPL was prepared in 2005 based on the costs prevailing in the same year and in-house data available with Engineers India Ltd (EIL); however, based on the project, the requirements were made in the year 2008. Time escalation, technology and design changes, and increase in power requirement, statutory variation in Wholesale Price Index (WPI) and taxes are the major factors that have contributed to escalation of project cost.
There is no cost overrun on the revised project cost and BCPL has evaluated the cost escalation factor in consultation with EIL. And after considering the escalation, extra work and forex fluctuation etc. till scheduled project commissioning, the project is expected to be within approved revised cost of the project.
The funds required for the project on the basis of revised cost have been arranged through equity, capital subsidy and debt as per approved means of finance. The debt component of the project cost has been arranged in a mix of term loan from banks by open competitive bidding and Oil Industries Development Board (OIDB) and one of the promoters.

May we have your comments on the factors that have affected timely completion of the project, especially the shortage of manpower?
The cracker involves modern engineering and latest state-of-the-art technologies that require highly skilled manpower for construction. Moreover, being a socio- economically under developed part of the country, there is always a shortage of required quality as well as quantity of manpower which is one of the prime reasons for the delay. But the backlog in the construction progress is not only because of lower output by contractors and contract labour engaged for the project but also due to various other reasons. Adverse weather conditions, frequent bandhs, strikes and festival holidays added to slowdown in pace of project execution. As on 30th June 2013, the project has lost 288 days due to these reasons.

How has the delay in project impacted the subsidies and the tax exemption offered for Government project?
Both the economic parameters, the Investment Return Ratio (IRR) and Debt Service Coverage Ratio (DSCR) can be maintained mainly in view of subsidies and tax exemptions offered by the Government and there are no changes because of the delay in project execution. Being a public sector company, we are committed to follow all the tendering and procurement guidelines as mandated by the Indian Government. However, the performance of various contractors appointed by BCPL was not up to the mark.

How did BCPL manage the Over Dimensioned Consignments (ODC)?
Beforehand action in terms of extensive route survey, selection of route and adequate logistics planning helped overcoming the hurdles and all ODC assignments for the project have safely landed at the project site. Only surface transport for ODCs was undertaken for the project.

Which products will be manufactured at the facility once the production is on-stream? Once commissioned, how will the project change the market dynamics? Are there plans to export a part of production?
BCPL will produce 2,26,000 TPA of Linear Low Density Polyethylene (LLDPE) and High Density Polyethylene (HDPE); and 60,000 TPA of Polypropylene (PP). Availability of polymer will induce growth of new downstream plastic processing industries in the region and generate employment avenues, trade and commerce in the region, thus increasing economic activities in the region. The polymer can be further used by the downstream plastics processing units to manufacture various products such as films, raffia bags, household items, plastic furniture, blow moulded containers etc. GAIL owns the rights for selling the products and is expected to sell the polymer in the North Eastern region itself. However, GAIL intends to supply 10 per cent of production to neighbouring countries subject to the demand.

What value will the project add to the North-East region in terms of employment potential and economic development?
The main spirit behind setting up of this gas cracker project in Assam is to improve socio-economic conditions of North East Region. Presently, consumption of plastic in Assam is 1-2 Kg per capita which is far less than the national average of 7 Kg per capita. As plastic market is supply driven, it is expected that consumption of plastic products will increase many folds with commissioning of this project. The project will supply feedstock to the downstream plastic processing industries, and availability of raw material will encourage setting up of many downstream industries thus resulting in creation of ample job opportunities in plastic industries in the region. Assam Government has also taken initiative to set up plastic park at Gelapukhuri, Tinsukia with a view to provide all necessary assistance to set up industrial ventures.
Currently, BCPL has 273 employees on BCPL s pay roll and on the average, around 500 labourers are deployed daily by various contractors at the project site at Lepetkata. 90 per cent of these daily wagers are from the local region. BCPL will offer direct employment to around 630 and many more through outsourced jobs in various areas such as housekeeping of township, bachelor s hostel, guest houses, canteen, transportation, loading and unloading, maintenance of civil and electrical works etc. It may be difficult to give any exact numbers for the employment potential. Apart from employment generation, the commissioning of project envisages enhancing commercial activities in the adjoining areas thus contributing towards the economic development of local populace and accelerating the growth of the region.

What are your future plans if BCPL intends setting up further downstream processing units?
As of now we do not have any plans to expand downstream into plastic processing. However, it has been estimated that up to 500 plastic processing units can come up in the North Eastern region once the cracker goes on stream. And the project is expected to give rise to direct/indirect employment generation as a result of investment in downstream plastic processing industries and allied activities.

May we have your comments on the role of BCPL in the planned plastic parks?
Assam Industrial Development Corporation (AIDC) is setting up the plastic park and requested BCPL for equity contribution of ` 25 crore for the planned project in Tinsukia district of state. However, the decision is pending as the BCPL board is mulling over this and will take the call only after a detailed analysis.

What are the various CSR activities undertaken by BCPL?
Currently, BCPL is at the stage of project implementation and not making any profits. Notwithstanding this, we have continued our CSR initiatives aimed at developing the nearby areas. BCPL formulated its CSR policy in the year 2010 and has been implementing various schemes from the same year in Dibrugarh district in the fields of infrastructure, community development, education and literacy enhancement; healthcare, medical and sanitation etc. The CSR projects undertaken so far include building classrooms at Moran Blind School and rooms at urban dispensary, construction of roads, installation of transformers and augmentation of power supply and Sulabh toilet complex.