Gas cracker project: people�s hopes and aspirations

Fri Jun 9 03:20:07 PDT 2006

Gas cracker project: peoples hopes and aspirations
  Dwaipayan The uncertainty surrounding the future of the long-waited Asom Gas Cracker Project seems to have frittered away because the Union Cabinet has already approved it and GAIL (India) has agreed to implement with Oil India Limited, Numaligarh Refinery Limited, and Assam Industrial Development Corporation, a State government undertaking. And, more importantly, the project will be completed within a time-frame of 60 months after necessary approvals are received.

 This is indeed an encouraging news, and was disclosed by none other than the Chief Minister Tarun Gogoi himself at a largely-attended Press conference at Guwahati on May 14, immediately after his taking over office for the second consecutive term. After all it will be a mega project with a hefty amount of Rs 5,460 crore to be invested in it. According to the arrangements, GAIL will have 70 per cent share in the joint venture project while OIL, AIDC and NRL will hold 10 per cent each. Gogoi informed that there will be a capital subsidy of Rs 2,138 crore for five years for it.

 Designed as part of the implementation of the Assam Accord signed between the AASU-AAGSP leaders and late Rajiv Gandhi on the night of August 14-15, 1985, the Asom Gas Cracker Project is something the people of the State have long been looking forward to get off to a flyer, and, that too, not without reasoning. Afterall, the proposed project, if at all implemented, will have the potential of bringing about turnaround in the overall situation in the State. In other words, its early completion can be expected to serve it in more ways than one. First, the project will help ensure radiating the prospects of rapid industrialisation of the State simply because its execution will automatically give birth to many a downstream industry.

 To be more candid, the substance that will emanate from it can well be used as an effective groundwork for setting up various allied industries for which the State is the most suitable place by virtue of its having been the treasure trove of mineral resources such as natural gas, crude oil, petroleum products etc. In the absence of tube, type, nylon and carbon industries in the North East including Asom, there is great demand for these products in this region as a whole. Therefore, an early implementation of the project will certainly help establish all the ancillary industries which in turn, will pave the way for producing such products. If such products are manufactured in large quantities locally, the people in the region can hope to purchase them at affordable prices.

 Secondly, the project completion will help brighten the scope for employment for the local educated unemployed youths. Of course, the opportunity for direct employment in it may not be as ample as can be thought. Even then it is being surmised that the number of persons to be absorbed in the project will be over 2,000, if not less. What, however, will be the most positive effect of the project is that it will create ample avenues for self-employment for the locals. In other words, quite a sizeable section of them will benefit financially if they set up downstream industries on their own and fully seize the opportunity of sale and purchase of the products they will produce when it comes their way.

 Last but not the least, the resultant rapid industrialisation that can quite legitimately be expected of the upcoming project will hopefully serve to widen the existing base of revenue-earnings for the State government.

 True, Asom is the most productive of all other States in the North East. But its acute financial crisis which is the corollary to the huge past public debts presumably hanging like a Democles sword in its head taken from various agencies including the Central government, from time to time by successive governments in the State to undertake relief and rehabilitation works for flood-affected people every year, and to meet the growing security expenses which have over the years slogged the developmental activity in the State. This is well mirrored in its per capita income and growth rate in the key sectors of the economy in the past couple of years. The recently circulated report entitled left behind: A case study of Assam by Mohan Guruswamy and R J Abraham can well be cited as accounting for the most telling example of how low is the per capita income of the State. The report says its per capita income is much lower compared to that of most States in the North East, being
 a meagre Rs 6,221.

 The per capita income of Asom will increase only when the growth rate of its economy rises. But it is not increasing in the manner in which it ought to have due to lack of investment, skilled labour, inadequate infrastructural facilities and geographical isolation. Pruning its revenue deficit or servicing its growing public debts, and thereby getting relieved of them, could have been possible provided its major industries, tea, petroleum and timber, did business as well as before. But unfortunately, they are today facing serious problems. The situation has further worsened because the State is not receiving necessary returns from investment in public sector undertakings.

 It was also widely believed that the Central governments North East Industrial Policy, 1997 will attract large-scale investment in the region including Asom. But it has also turned out to be of no use due to the same tax concessions offered under it to an entrepreneur willing to invest here have been extended to three other States, Jammu and Kashmir, Himachal Pradesh and Uttaranchal.

 In this shabby economic backdrop of Asom, what is urgently needed is its rapid industrial growth which one believes, only the proposed mega gas cracker can ensure. Which is why all are wishing its early completion. But, still, there are some sections of people who doubts if it will at all be implemented in the near future. They argue that ever since the then Prime minister had laid the foundation for the project in the State in 1992, 24 years have elapsed. During this prolonged period several projects have already been completed elsewhere in the country as have been in Auriya in UP, Gandhar in Gujarat and Haldia in West Bengal. But they rue the inordinate delay in embarking on work on the Gas Cracker in Asom which is yet to see the light of the day. That is why they are sceptical about its future.

 The doubt they have expressed can scarcely be discounted as being preposterous and unfounded. Frankly speaking, during the period since its foundation two corporate giants, the Thapar Group and the Reliance Industries Limited came in and agreed to implement the project. Initially it is the Thapar Group that had shouldered the responsibility on being assured that adequate gas would be supplied to it for production of 2 lakh TPA ethylene. But for reasons best known to it, the company dropped the idea midway after wasting precious time in decision-making.

 Then came the Reliance Industries. It was agreed upon that the company would be given various concessions by the Centre by way of supplying natural gas at a subsidised price of Rs 600 per one thousand standard cubic metres and, more importantly, sanctioning a capital subsidy of Rs 370 crore for it. But after sometime it also reportedly backed out because of non-availability of sufficient feed stock in particular, though it was learnt that the IOC had agreed to provide LPG to make up for the shortfall in feedstock.

 There is a school of thought which says that the concerned company was softpeddling the implementation issue because it had allegedly diverted the subsidy amount it had received to other sectors. Whether or not it is authentic or a mere heresay is difficult to infer.

 All these unpleasant developments have naturally raised doubt among sections of the people in the State about the sincerity of GAIL. There seems, however, no reason at all to worry about its implementation at least this time. The State government will presumably agree to grant GAIL exemptions from various duties and taxes. So will the Centre. After all it is a Central government undertaking. Another indicator to its early completion is New Delhis recent constitution of a high-level official panel headed by a Joint Secretary as Union Minister for Chemicals and Fertiliser and Steel Ram Vilas Paswan said.
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