GAIL India ends contract to lay pipeline in TN

IN A big blow to PSU major GAIL, the Maharatna gas major has decided to cancel the contracts awarded to lay the pipeline in Tamil Nadu. The 310 km pipeline, a part of the GAIL's Rs 3,400 crore Kochi-Mangalore LNG pipeline project, connects LNG terminal...
in Kochi to Karnataka via Southern Tamil Nadu districts including Coimbatore, Erode, Tirupur, Namakkal, Salem, Dharmapuri and Krishnagiri.
The Supreme Court is hearing the dispute over the pipeline project now and the company can act only after a verdict from the apex court.
Villagers from Palladam, near Coimbatore, said GAIL has cleared its storage yard in the region. This is one of the two yards, which the company used for storing items for the project. The other one is at Dharmapuri.
Earlier, the state-run firm scrapped a supply contract worth Rs 250 crore awarded to engineering firm Fabtech for building 300 km of the 900 km pipeline.
GAIL has already pumped in around Rs 600 crore for laying the pipeline in Tamil Nadu, including allocation of the contract for around Rs 200 crore. Cancellation of the deal will lead to a dispute between the contract firm and the company.
Also as the Kochi LNG terminal would be ready and the evacuation of the gas would be another issue for the company. The dispute will affect project deadlines.
As GAIL has already bought the steel pipes, cancelling the contract will lead to losses. The option before the company is to wait for the Supreme Court order and most importantly, seek consensus with the state government to take the project forward.
The state government has categorically stated that it will not allow the project if it affects the farmers. The state government has also asked GAIL to look at taking the project adjacent to the National Highways.
The project passes through seven districts in the state covering 137 villages, 5000 acres of farm land directly and another 50,000 acres indirectly.