Gail (India)-led joint venture, the Rs 5,460 crore Lapetkata petrochemical project, will make the financial closure by November.

Gail chairman UD Choubey said the project at Dibrugarh in Assam, which has been configured with a capacity of producing 2,20,000 tonne per annum (TPA) of ethylene, 60,000 TPA of polypropylene, 55,000 TPA of raw pyrolysis gasoline and 12,500 TPA of fuel oil, will start production by 2012.

Although the project got clearance from the cabinet committee on economic affairs (CCEA) in 2006, “it will make its financial closure within two months from now,” Choubey said.

Lapetkata petrochem, in which Gail holds 70% equity, Oil India Ltd 10%, Numaligarh Refineries Ltd 10% and Assam government 10%, has already tied up for feed stock with

Oil India Ltd, ONGC Ltd and Numaligarh Refinery Ltd (NRL).

The project is expected to create 500 downstream industries in the northeast producing polymer goods, but average per capita consumption of polymer goods are lowest in northeast India, Choubey said.

Choubey was here to attend the Northeast summit, organised by the ministry for development of northeast region (DONER) and the Indian Chamber of Commerce (ICC).

He said work for the two exploration blocks awarded in Tripura and Assam under the NELP round of four and five respectively, are in progress. GAIL will start drilling one well in the Tripura block by November.

Gail has 29 exploration blocks across the country at present including the block in Cauvery basin, awarded in the latest or the seventh round of Nelp. Of the 29 blocks, seven blocks have been proven to have hydrocarbon reserves.

He said gas is being offered at a 45% subsidised price but “the government has to see whether the growth of a subsidy-based industry is really sustainable.

Petronet LNG was importing gas at a free on board (FOB) value of $2.53 per million BTU (British thermal unit). However, in India gas prices are at around $4.75 per million BTU. Gas from the eastern region is being sold at Rs 2300 per hundred cubic metres, Choubey said. At present, only 60% of GAIL’s 7000 km of pipeline network is being utilised and the company will install an additional 6000 km of gas pipeline by 2012,entailing investment of Rs 20,000 crore. DAIL was creating enough capacity in advance for flow of gas in the country. The gas pipeline major was looking for blocks in Libya, Nigeria and Kazakhstan. At present, it controls A-1 and A-2 blocks in Myanmar.