GAIL needs Rs 12,200 cr budgetary support for pipeline project: Media report

MAHARATNA PSU GAIL has suggested the government meet the entire estimated cost of Rs 12,200 crore to lay a 2,539-km pipeline connecting Uttar Pradesh, Bihar, West Bengal and Odisha.
The budgetary allocation is being sought by the flagship natural gas transportation PSU as it is not hopeful of getting enough customers for the pipeline to be viable. It may be recalled...
the government wants to build in the pipeline order to boost natural gas availability in the country.
The Phulpur-Haldia-Ranchi-Dhamra pipeline, earlier known as Jagdishpur-Haldia line, is to be completed by 2018-19. It is expected to offer gas for revival of fertiliser units at Gorakhpur in Uttar Pradesh and Barauni in Bihar.
“GAIL has submitted a proposal seeking financial support for the pipeline. The government could consider to offer budgetary support so that the gap between the investment and the minimum rate of return for the pipeline could be bridged,” a senior petroleum ministry official was quoted as telling a leading financial daily.
GAIL implements new projects expecting an internal rate of return (IRR) of at least 12 percent.
The petroleum ministry’s plan to offer viability gap funding for natural gas pipelines did not sail through after North Block opined that such 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 completion will depend on the fertiliser plants coming up in the region as well as the timing of the Dharma LNG terminal,” BC Tripathi, CMD of GAIL, had said earlier.
Laying the pipeline and getting new consumers is key for the PSU and also to sell around 6 million tonnes of gas it would be importing from the US beginning 2018.
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.
GAIL was incorporated in August 1984 as a Central PSU under the Ministry of Petroleum & Natural Gas. The PSU was initially given the responsibility of construction, operation & maintenance of the Hazira – Vijaypur – Jagdishpur (HVJ) pipeline Project. It was one of the largest cross-country natural gas pipeline projects in the world. Originally this 1800 Km long pipeline was built at a cost of Rs 1700 Crores and it laid the foundation for development of market for natural Gas in India.
GAIL, after having started as a natural gas transmission company during the late eighties, has grown organically by building large network of natural gas pipelines covering more than 10900 km with a capacity of around 200 MMSCMD; two LPG Pipelines covering 2040 Km with a capacity of 3.8 MMTPA of LPG; seven gas processing plants for production of LPG and other Liquid Hydrocarbons, with a production capacity of 1.4 MMTPA; and a gas based integrated Petrochemical plant of 410,000 TPA polymer capacity which is further being expanded to a capacity of 900,000 TPA. The Maharatna PSU also has 70-percent equity share in Brahmaputra Cracker and Polymer Limited (BCPL) which is setting up a 280,000 TPA polymer plant in Assam. GAIL has 32.86 per cent stake along with NTPC as equal partner in JV entity, RGPPL at Dabhol which is house to largest gas based power generation facility and an LNG regasification terminal operated by GAIL.
GAIL is also a pioneer in City Gas Distribution (CGD) business in India, with Indraprastha Gas Limited (IGL) in Delhi and Mahanagar Gas Limited (MGL) in Mumbai being its biggest success stories.