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Shobha Kannan

Guwahati, Sept. 16 The financial closure for the gas cracker project of GAIL (India) in Lapetkata in Dibrugarh district is expected to be finalised in the next two months, according to Mr U.D. Choubey, Chairman and Managing Director, GAIL (India).

“The Lapetkata project is moving on time and is expected to be completed by 2012 as committed by GAIL,” said Mr Choubey on the sidelines of the North-East Business Summit jointly organised by Ministry of Development of North Eastern Region and Indian Chamber of Commerce on Tuesday.

Mr Choubey met the Assam Chief Minister, Mr Tarun Gogoi, on Monday and reviewed the progress of the Lapetkata project.

GAIL would have the majority 70 per cent stake in the project, while Oil India Ltd, Numaligarh Refinery Ltd (NRL) and Assam Gas Company Ltd 10 per cent each, Mr Choubey said. The total investment of the company in this project would be Rs 5,460 crore on a debt-equity ratio of 2:1, he said. The company was in the process of identifying the bankers for the deal, he added.

“Of Rs 5,460 crore, about Rs 3,000 crore is expected to come as a capital subsidy from the Government of India,” he said. The petrochemical plant, once developed, would help in the sustained growth of the region. Mr Choubey further said the project had environmental clearance from the State and Central governments and had also received an assured supply of feedstock. “We have an assured feedstock supply from Oil India, ONGC and NRL,” he said.

GAIL, according to the Chairman, has so far invested to the tune of Rs 600-700 crore in the north-eastern States of Tripura and Assam. The company was awarded two exploration blocks in NELP IV and V in Tripura and Assam respectively. “Work has already started in the Tripura block and we will start drilling in one of the wells from November this year,” he said.

Referring to the pricing of the gas, Mr Choubey said LNG Petronet was imported at $2.53/million BTU on FOB basis. This price could come up for revision in January 2009, he said. In the domestic market the price was ruling at about $4.75/million BTU. In the north-eastern region the gas price was at Rs 2,300/100 cubic metre.

“In the domestic market gas prices have been discounted at 45 per cent. We should keep ourselves away from subsidies in order to achieve sustainable economic development,” he pointed out.

The company will invest Rs 20,000 crore on gas pipeline projects by 2012. GAIL was in the process of laying 6,000 km of pipeline. “In the first phase we will invest Rs 14,000 crore and an additional Rs 6,000 crore in the second phase,” said Mr Choubey.

More Stories on : New Projects | Petroleum | GAIL (India) Ltd

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