Gas pipelines: Cheaper energy basket in offing

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August 23, 2021 6:45 AM

With 15,369 km of gas pipelines being built across India, natural gas use is estimated to witness a sizeable rise, reducing India's carbon footprint

“Gas pipeline projects take time to build up to their economic operation capacities and this period could be five years or even more,” he adds.“Gas pipeline projects take time to build up to their economic operation capacities and this period could be five years or even more,” he adds.

With the country aiming to increase the share of gas in its energy basket to 15% by 2030 from the current level of 6%, 15,369 km of pipelines are under various stages of construction at present. Taken together with the 17,126 km of existing pipelines, these would help create a basic national gas grid in the country.

India’s annual gas consumption is expected to increase by 25 billion cubic metres (bcm) in the 2020-2024 period, which translates into a 9% annual average growth rate, the International Energy Agency (IEA) said in a recent report. Though gas is cheaper than other fossil fuels, gas pipelines require high capex and longer gestation periods. The order of magnitude cost of a trunk gas pipeline can be placed in the range of Rs 6-7 crore/km, says Gaurav Moda, energy leader at EY India.

“Gas pipeline projects take time to build up to their economic operation capacities and this period could be five years or even more,” he adds.

The 3,546-km-long Jagdishpur-Haldia-Bokaro-Dhamra natural gas pipeline, being built by GAIL Ltd as part of the Pradhan Mantri Urja Ganga project, is the largest pipeline project being executed. Aimed at supplying gas to eastern India, it is estimated to cost Rs 12,940 crore. The project has been facing delays, mainly due to issues relating to handing over of land for right of use (RoU) acquisition, farmer agitations, clearances from forest and revenue departments, besides fixation of compensation rates by state governments.

Debasish Mishra, leader of energy, resources and industrial products at Deloitte India tells FE a “centralised team to coordinate with the states on RoU issues will go a long way” in expediting the pace of pipeline construction. “Further, the petroleum ministry and NHAI can join hands to create gas pipeline corridors, which would expedite implementation,” he adds.

The Urja Ganga network would be connected with a spur line to the Dhamra-Haldia and the Barauni-Guwahati line. Subsequently, this network would be connected to the 1,656-km north east gas grid pipeline project being implemented by Indradhanush Gas Grid Ltd. The estimated cost of the north east grid project is Rs 9,265 crore. Pipeline laying work for the Guwahati-Numaligarh-Gohpur-Itanagar section of this project commenced in December, 2020 and it is scheduled to be ready by March, 2024.

Other major gas pipelines being built include the 1,755-km Mumbai-Nagpur-Jharsuguda pipeline across Maharashtra, Madhya Pradesh, Chhattisgarh and Odisha, the 391-km Kakinada-Vizag-Srikakulam line and the 525-km Kakinada-Vijayawada-Nellore line in Andhra Pradesh, the 741-km Jaigarh-Mangalore line across Maharashtra, Goa and Karnataka, the 317-km Kanai Chhata-Shrirampur line in West Bengal and the 690-km Srikakulam-Angul line across Andhra Pradesh and Odisha.

At the same time, experts point out that gas demand in the country has been weaker than expected. “We don’t have significant gas being consumed in the power sector and it was only in 2018-2019 that multiple city gas distribution bids were conducted, creating the need to connect different cities with gas pipelines,” Mishra says.

Natural gas is seen as a ‘bridge’ or ‘transition’ fuel as it is cleaner than traditional fuel sources. However, owing to its carbon-intensive nature, natural gas would come under the scanner if nations want to pursue ‘deep decarbonisation’ goals, rendering gas pipeline assets stranded. If the country wants to stay on the two-degrees-Celsius pathway — which would limit global warming to 2 degrees Celsius by 2100 — the optimal share of natural gas in the Indian energy basket by 2050 is estimated at 18%. “This (18% share) would ensure that India can reap the benefits of low natural gas prices without locking itself down with potentially stranded assets and staying on low carbon pathway,” the Council on Energy, Environment and Water said recently.

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