Petronet loses Rs 400 cr on Kochi pipeline delay

Written by M Sarita Varma | Thiruvanananthapuram | Updated: Oct 30 2014, 08:21am hrs
The delay in setting up Petronet-Kochis liquefied natural gas (LNG) pipeline has resulted in a Rs 400-crore loss to the company. Though the roadblocks are easing, improvement in the volumes at the Puthuvype (Kochi) terminal is likely to happen at the earliest by 2017.

Barely 2% of the installed capacity can be utilised currently, translating to about Rs 400-crore outgo, through interest and depreciation. Even the storage facility for LNG had to be rented out to cut corners, said Petronet CEO and managing director EK Balyan.

The Kerala goverment has promised to help Gas Authority of India (GAIL) in facilitating the right-of-use on land for laying the phase II of the Kochi pipeline. GAIL's Rs 5,000-crore project to link the Petronet LNG's Kochi terminal with Mangalore and Bangalore through a pipeline had hit a roadblock due to land owners in some parts of north Kerala refusing to give 'Right To Use' consent letters to the former.

Following the state government's mediation this week, compensation has been quadrupled to ease protests. The ownership of the land would not go to GAIL even when it get the right to use and lay the pipeline, chief minister Ommen Chandy said. GAIL has agreed to compensation upto 50%, if the land-owner gives "Right to Use" consent letters.

After parleys, there is a fair amount of consensus on compensation and alignment, Balyan said, on the recent positive developments. The company however, ruled out the state's proposal of an alignment through the side of the abandoned Canoli canal.

It has been a chequered path for GAIL to get necessary approvals and rights-of-use to lay 1,389 km of pipeline connecting Kochi with Mangalore and Bangalore. Only the first phase of 44 km is operational so far. The 312-km pipeline passing through Tamil Nadu, however, under litigation.

"The fears regarding the safety of LNG is misplaced," says Balyan. "LNG is safer than LPG, Balyan said. What happened in Andhra is a rare, caused by human carelessness,"he added.