Even as India’s natural gas production is stagnant and demand for the fuel is set to rise sharply, the Comptroller and Audit General (CAG) has pulled up the petroleum ministry for its alleged failure to get Petronet LNG, in which the government holds 50% through oil PSUs, to show urgency in setting up LNG terminals.

The CAG has prepared what is called ‘half margins’ or evaluations on Petronet’s business where it says that Petronet has failed to stick to the original time-line for setting up LNG terminals and delayed the commissioning of the Kochi terminal, said sources. The premier auditor is now awaiting responses from the oil ministry for Petronet’s alleged tardiness in setting up terminals.

In the late 1990s, a list of LNG projects to be set up in places like Ennore and Mangalore by Petronet was approved by the government, but the projects haven’t since come up. The CAG also stated that though it takes just 3-4 years to set up a terminal, the Kochi terminal has still not been commissioned 16 years hence. The Kochi terminal will now be commissioned later this month.

India imported around 63 mmscmd of LNG in 2012-13 and this will rise to 150 mmscmd by 2016-17, and 258 mmscmd by 2021-22. Currently the regasification capacity stands at 66 mmscmd and needs to be ramped up to meet future demands. With the technical difficulties being faced by RIL?s KG-D6 gas field and overall natural gas production declining, the dependence on LNG will remain high.

RK Garg, director-finance at Petronet LNG, told FE that the CAG’s report was based on targets set in 1997, but market realities have changed ever since. ?Setting up so many terminals would have led to overcapacity as the supporting infrastructure is not in place. For instance despite the commissioning of Kochi terminal in August it will have to run at just 8% capacity to start off with as GAIL India’s Kochi-TN-Bangalore pipeline is still no ready.?

Garg added that what is more important at this point is setting up more pipelines rather than expensive terminals that require investments of around Rs 5,000 crore.