India's BCPL Gas Cracker Project Running Six Months Behind Schedule

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Researched by Industrial Info Resources (Sugar Land, Texas)--Brahmaputra Cracker and Polymer Limited (BCPL) (Guwahati, Assam) recently announced that its mega-gas cracker project under development at Lepetkata, in the Dibrugarh district of the northeastern state of Assam, was running six months behind schedule because of a lack of skilled manpower, the long monsoon season and other issues, such as variations in foreign exchange rates and an increase in the price of natural gas. The project costs also could increase 15% to 20% against the original estimate of $1.2 billion, which was made five years ago in 2005.

Against a planned project progress of 37.6%, BCPL has been able to achieve only 18.2% progress so far. Acquiring sufficient and skilled manpower is proving to be a major challenge to the project, and BCPL is making every effort to find it. The company is coordinating with advisory and project development company IL&FS Infrastructure Development Corporation Limited (Mumbai) to set up two skill-development centers at Dibrugarh and Jorhat to train local youths as per requirement. The company also has begun to send local youths to the National Academy of Constructions in Hyderabad, Andhra Pradesh, to acquire the necessary vocational skills.

"When construction starts in January 2011, there will be a requirement of a workforce of 16,000," said Chairman B.C. Tripathi of BCPL. He said that to ensure the participation of local contractors in civil works, BCPL relaxed some of the financial and work experience criteria. Of the 77 engineers and executives appointed to the project so far, about 65% are from the region.

Tripathi said that another reason for the delay in the development of the cracker was the unwillingness of technology licensors to send quotations for critical units of low-capacity plants.

The company's board of directors recently met to discuss the cost projections and what the possible delay implies. Scheduled to be completed in April 2012, the project has incurred expenses of more than $917 million. Tripathi said, "We are running about six months behind schedule, and efforts are being put in to catch up for the delays to maintain project completion schedule of April 2012 as originally planned." The project is expected to progress faster when the monsoon season draws to a close.

Natural gas feedstock for the project will be sourced from the state-run Oil and Natural Gas Corporation Limited (BSE:500312) (New Delhi) and Oil India Limited (BSE:533106) (Noida, New Delhi), while naphtha will be sourced from Numaligarh Refinery Limited (Guwahati, Assam), a subsidiary of Bharat Petroleum Corporation Limited (BSE:500547) (BPCL) (Mumbai). Gas supply agreements already are in place.

Tripathi said that 100% of the required land had been acquired and the site development is under way. Environmental clearances have been obtained from both state and central governments. Almost $748 million worth of contracts and purchase orders have been placed, and the remaining contracts and orders are being taken care of at a fast pace.

The project is expected to produce 220,000 tons per year of ethylene; 110,000 tons per year of linear low-density polyethylene; 110,000 tons per year of high-density polyethylene; 60,000 tons per year of polypropylene; 55,000 tons per year of raw pyrolysis gas; and 12,500 tons per year of fuel oil.

BCPL is a joint venture company promoted by natural gas company GAIL (India) Limited (BSE:532155) (New Delhi) with a 70% stake, while the remaining 30% stake is shared equally by the Assam state government, Numaligarh Refinery Limited and Oil India Limited.

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