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Cabinet approves 40% funding for gas pipeline project, city gas distribution in east India
In what may boost the infrastructure development of eastern India and help the country move towards a gas-based economy, the government has decided to provide a viability gap funding of 40% to GAIL (India) Ltd to construct the Jagdishpur-Haldia and Bokaro-Dhamra gas pipeline project. The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved grant of around Rs.51.76 billion for the project which has an estimated cost of Rs.129.40 billion. The project will encompass five states—Uttar Pradesh, Bihar, Jharkhand, West Bengal and Odisha—and connect them to the national gas grid.
“The gas pipeline that seemed a distant reality was taken up by the Cabinet today and the government has worked on its economic framework,” said minister for petroleum and natural gas Dharmendra Pradhan in New Delhi while addressing a press conference. He added that this is for the first time after a long gap that the government plans to invest in oil infrastructure. As part of the National Democratic Alliance government’s plans to move towards clean energy sources, Pradhan has set a target of natural gas contributing 15% to India’s energy mix. The country is also planning a natural gas hub for market pricing discovery, as reported by InfraCircle on 14 September.
The 2,539km long pipeline will also cater to the three urea production units, which the government is reviving at present, and they will act as the anchor customers of gas, required in the production of fertilisers, from these pipelines. The units are at Barauni in Bihar, Sindri in Jharkhand and Gorakhpur in Uttar Pradesh. The Cabinet had on 13 July approved the revival of these units with an overall investment of Rs. 180 billion through the special purpose vehicle route. The pipeline will also service refineries at Haldia (West Bengal), Barauni and Paradip (Odisha).
The ministry estimates that the pipeline, which is being constructed by GAIL under three phases, should be completed in about two-and-a-half years. Experts say the decision opens up the window for future viability funding in the pipeline circuit. “It portrays the positive attitude of the government. It surely is looking at expanding its pursuits,” said R.S. Butola, former head of Indian Oil Corp. Ltd. Pradhan also said that gas pipeline will also aid the food processing units in 25 industrial towns which require gas. “Though foreign direct investment (FDI) has been allowed in food processing business, lack of infrastructure and facilities was hurting,” added Pradhan.
The government had allowed 100% FDI in marketing of food products produced and manufactured in India in the general budget of 2016-17. In a related decision, the CCEA also approved development of city gas distribution (CGD) pipeline in eight cities—Varanasi, Patna, Ranchi, Jamshedpur, Kolkata, Bhubaneshwar and Cuttack—which have a combined population of 12.5 million. Pradhan said that a total of Rs.190 billion will be spent on the CGD project. This shall help provide piped natural gas in east India which till date was available in other parts of the country, added Pradhan. As per the Petroleum Planning Analysis Cell, part of the ministry of petroleum and natural gas, India’s gas pipeline grid length is 16,250km. The country’s domestic gas production fell by 4.7% to 31.14 billion cu. metres (bcm) in financial year 2015-16 from 32.69 bcm in the previous year. Janoris Jenkins Womens Jersey
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