NEW DELHI, Aug 9 � Raising serious objections to the selection of site for the Assam Gas Cracker Project, the Comptroller and Auditor General of India (CAG) has held deficiency in preparation of Detailed Feasibility Report (DFR), inefficient and ineffective pre-project planning as causes for the huge cost overrun to the tune of over Rs 3,400 crore.
The CAG Report, tabled in the Parliament on Thursday, has remarked that the pre-project activities of the Gas Cracker Project were not carried out efficiently and effectively, which contributed to increase in the cost of the project.
An amount of Rs 6,032 crore has already been incurred for the project till January, with physical completion of 88 per cent. Capital subsidy amounting to Rs 3,702 crore was received by the company till January.
What is very significant is that the CAG has raised an alarm over the possibility of the mega gas cracker project being hit by floods in the future. It observed that the site was on an undulating terrain with a long stretch of low lying area along the river bank, which is highly flood prone.
The CAG report has found that the site, located 50 Km away from Duliajan and 45 Km from Lakwa, required an investment of Rs 114.65 crore for transportation of gas through pipeline.
It was observed that the site was selected without any initial topographical survey. An amount of Rs 291.18 crore was estimated for the development of such land and Rs 130.37 crore had been incurred till January.
The report said that it was decided in March 1997 by the Cabinet to transfer the Lakwa Plant of GAIL to the Gas Cracker Project. It was further observed that though the Government of India had decided to transfer the LPG plant to the project at a price to be determined by an independent agency, no agency was appointed to settle the price. The transfer of such loss making plant to the project would impact the economic viability of the project.
The Audit had detected that the LPG plant of GAIL at Lakwa, commissioned in October 1998 with a capacity of 0.85 lakh TPA of LPG, was operated at a low capacity due to non-availability of adequate quantity and quality of gas and was incurring losses.
It was also observed that the maximum capacity of Assam Gas Cracker Plant would be limited to 1.93 lakh TPA of ethylene, which was below the project capacity (2.2 lakh TPA).
The price of the feedstock has been considered much lower than the market price, the CAG report said.