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Centre gives Rs 5.1k cr to link east India with gas grid

In a move that could boost natural gas supplies to eastern states, the Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved viability gap funding (40% capital grant) amounting to Rs 5,176 crore of the estimated capital cost of Rs 12,940 crore to GAIL for implementing the 2,539-km Jagdishpur-Haidia and Bokaro-Dhamra Gas Pipeline (JHBDPL) project.

By: | New Delhi | Updated: September 22, 2016 7:01 AM
mahanagar gas shares While GAIL had sought the entire estimated cost of Rs 12,940 crore to lay the natural pipeline because the PSU was not confident of getting enough anchor customers for the pipeline, the government decided to meet 40% of the project cost as capital grant. (Reuters)

In a move that could boost natural gas supplies to eastern states, the Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved viability gap funding (40% capital grant) amounting to Rs 5,176 crore of the estimated capital cost of Rs 12,940 crore to GAIL for implementing the 2,539-km Jagdishpur-Haidia and Bokaro-Dhamra Gas Pipeline (JHBDPL) project.

On July 19, FE was the first to report that the government might offer capital grant to GAIL to lay the pipeline connecting Uttar Pradesh, Bihar, West Bengal and Odisha. The CCEA also approved the simultaneous development of city gas distribution (CGD) networks in cities — Varanasi, Patna, Ranchi, Jamshedpur, Bhubaneswar, Kolkata and Cuttack — en route the JHBDPL project. These distribution networks will be developed by GAIL in collaboration with the states.

While GAIL had sought the entire estimated cost of Rs 12,940 crore to lay the natural pipeline because the PSU was not confident of getting enough anchor customers for the pipeline, the government decided to meet 40% of the project cost as capital grant.

The Phulpur-Haldia-Ranchi-Dhamra pipeline, earlier known as Jagdishpur-Haldia line, is to be completed by 2018-19. However, GAIL’s existing pipeline network is ferrying gas at less than 50% capacity and concerns over costs have made the firm wary. Laying the pipeline and getting new consumers is pivotal for GAIL as well as to sell around six million tonnes of gas it would be importing from the US beginning 2018.

In order to generate anchor the load, the Cabinet on June 13 approved the revival of defunct fertiliser units of Fertiliser Corporation India at Sindri (Jharkhand), and Gorakhpur (UP) and Barauni (Bihar) units of Hindustan Fertilisers Corporation. These three would be revived by means of SPVs of PSUs through nomination route.

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