In a move that could boost natural gas supplies to northern and eastern states, the finance ministry is understood to have agreed to offer capital grant to India’s flagship natural gas transportation firm GAIL...
In a move that could boost natural gas supplies to northern and eastern states, the finance ministry is understood to have agreed to offer capital grant to India’s flagship natural gas transportation firm GAIL to lay a 2,539-km pipeline connecting Uttar Pradesh, Bihar, West Bengal and Odisha.
While GAIL had sought the entire estimated cost of Rs 12,200 crore to lay the natural pipeline because the PSU was not confident of getting enough anchor customers for the pipeline, North Block would meet 40% of the project cost as capital grant, sources said, meaning about Rs 5,000 crore will be provided from the central budget between FY17-FY20. The government will shortly move a Cabinet note on this, sources added.
The Phulpur-Haldia-Ranchi-Dhamra pipeline, earlier known as Jagdishpur-Haldia line, is to be completed by 2018-19. However, with GAIL’s existing pipeline network ferrying gas at less than 50% capacity and the concerns over the costs have made the firm wary. Laying the pipeline and getting new consumers is pivotal for GAIL as well to sell around six million tonnes of gas it would be importing from the US beginning 2018.
In order to generate anchor load for the pipeline, the Union Cabinet on June 13 approved the revival of defunct fertiliser units of Fertilizer Corporation India (FCIL) at Sindri (Jharkhand) and Gorakhpur (Uttar Pradesh) and Barauni (Bihar) unit of Hindustan Fertilizers Corporation (HFCL). These three fertilisers units would be revived by means of special purpose vehicle of PSUs — NTPC, Coal India and Indian Oil Corporation (IOCL) and FCIL/HFCL, through the nomination route.
Earlier, the petroleum ministry’s plan to offer viability gap funding for natural gas pipelines did not sail through after North Block said such a scheme does not cover the funding for the development of gas pipelines.
“While we can confirm that phase I will be completed by December 2018, phases II and III’s completion will depend on the fertiliser plants coming up in the region as well as the timing of the Dharma LNG terminal,” BC Tripathi, chairman and managing director of GAIL, said recently.
The pipeline, poised to make natural gas reach doorstep of every big and small gas customers in the northern and eastern states, is proposed to be built in three stages — the first phase of 755 km (Rs 3,220 crore); second phase of 1,201 km (Rs 5,565 crore) and third phase of 583 km (Rs 3,425 crore). This would include the main and the spur lines.