We will lay 4,000 km of pipelines in 30 month: B C Tri­pathi

THE UNION GOV­ERN­MENT IN SEPTEM­BER AP­PROVED 40% VI­A­BIL­ITY GAP FUND­ING FOR THE JAGDISH PURHALDIA AND BOKARO-DHAMRA PIPELINES. GAIL, THE COUN­TRY’S LARGEST NAT­U­RAL GAS MAR­KETER AND TRANSPORTER, IS RE­CEIV­ING THIS SUP­PORT TO PUSH GAS-BASED DE­VEL­OP­MENT ALONG A C

Resource Digest - - CONTENTS -

WHAT IN­VEST­MENTS ARE YOU MAK­ING IN PIPELINE IN­FRA­STRUC­TURE? We are ex­e­cut­ing Rs 20,000 crore worth of projects in which 4,000 km of pipelines will be laid in the next two-and-ahalf years. These in­clude the Jagdish­pur-dhamra, Vi­jaipur (Mad­hya Pradesh)-au­raiya (Ut­tar Pradesh) and Vi­jaipur-au­raiya­phulpur pipelines. The Jagdish­pur-hal­dia-dhamra pipeline is a Rs 13,000 crore project.

Work has started on the Kochi-man­galuru pipeline. We are also re­fur­bish­ing our old pipelines in Gu­jarat, which are 40 years old, and also in the Cau­very and Kr­ishna Go­davari basins.

The fo­cus is also on ex­pand­ing last-mile con­nec­tiv­ity to houses and net­works in cities. The ma­jor em­pha­sis by GAIL is in Ben­galuru, where we have in­vested al­most Rs 750 crore. We have al­ready con­nected 20,000 houses and the tar­get is to con­nect 30,000 houses by the end of this year. Be­sides, GAIL

Gas will be adding 10 more CNG sta­tions in other au­tho­rised ar­eas like Meerut, Sonepat, Devas and Kota. Our joint ven­tures like In­draprastha Gas and Ma­hana­gar Gas are adding al­most 100,000 house­holds an­nu­ally.

Through our joint ven­ture com­pany in Andhra Pradesh, we are lay­ing a pipeline from Kak­i­nada to Visakha­p­at­nam and three city gas net­works are be­ing au­tho­rised.

HOW IM­POR­TANT IS THE JAGDISH­PUR-DHAMRA PIPELINE FOR THE COUN­TRY? THE PETROLEUM AND NAT­U­RAL GAS REG­U­LA­TORY BOARD HAS QUES­TIONED THE GOV­ERN­MENT'S DE­CI­SION TO SET UP THIS PIPELINE, STAT­ING IT NEEDS REG­U­LA­TORY AU­THO­RI­SA­TION...

This pipeline was au­tho­rised in 2006 by the min­istry, be­fore the reg­u­la­tor came into the picture. So the Jagdish­pur-hal­dia pipeline and the line con­nect­ing to the Dham­ralng ter­mi­nal does not need any au­tho­ri­sa­tion. We have re­ceived nods for five pipelines. We are ex­e­cut­ing it (the Jagdish­pur-hal­dia pipeline) now be­cause the gov­ern­ment has con­sid­ered the whole in­vest­ment as a pack­age and down­stream fer­tiliser plants are also com­ing up there. Three fer­tiliser plants are com­ing up there and for the fourth one of Matix at Dur­ga­pur we have signed an agree­ment to sup­ply 1.5 mil­lion stan­dard cu­bic me­tres of gas a day. By 2019, when the fer­tiliser plants will come up, the pipeline will also be ready and so will the city gas net­works in the area.

In the long run, it will be a good thing for the coun­try since it will con­nect Ut­tar Pradesh, Bi­har, Jhark­hand, Odisha and West Ben­gal, which lag in gas in­fra­struc­ture.

BE­ING THE LARGEST PLAYER IN THE NAT­U­RAL GAS MAR­KET, DO YOU THINK A BIG­GER GOV­ERN­MENT PUSH IS RE­QUIRED?

For this project, a 40% grant is com­ing from the gov­ern­ment. That it­self is a clear man­i­fes­ta­tion that the gov­ern­ment wants the in­fra­struc­ture. The gov­ern­ment has also pushed the re­vival of three fer­tiliser plants.

That en­sures the down­stream de­mand, as well as in­fra­struc­ture and sup­ply. Once these an­chor cus­tomers are there and this high­way is laid, small in­dus­tries, city gas and re­tail cus­tomers will ben­e­fit.

NAT­U­RAL GAS IS NOT LIKELY TO BE IN­CLUDED IN THE GOODS AND SER­VICE TAX REGIME. WHAT KIND OF TAX IN­CEN­TIVE WILL BE RE­QUIRED TO PRO­MOTE ITS USE?

Gas to­day needs some sup­port from the gov­ern­ment on the lines of that available to re­new­able en­ergy. Cur­rently, nat­u­ral gas in­vites cus­toms duty, ex­cise duty and VAT. We want it to be in­cluded in the GST regime. Dis­cus­sions are on in this re­gard. If that hap­pens, gas is go­ing to be much more af­ford­able. Roughly $2.5-3 is the com­po­nent of dif­fer­ent taxes and du­ties by the time gas reaches the con­sumer. Even if it is re­duced by half, it will save $1.5. To­day, crude oil has zero cus­toms duty, while gas has a 5% duty. On CNG, you have ex­cise duty. Ex­cise duty is nor­mally for some­thing new be­ing formed, there is no value ad­di­tion that is done in CNG.

IS GAS-BASED POWER COM­PET­I­TIVE COM­PARED TO COAL?

Nat­u­ral gas prices have crashed from $14-15 to $7.5-8 per mbtu. Even if there is a pick-up in crude oil prices, nat­u­ral gas will al­ways be cheaper. A re­cent study by the World Bank says on an average coal power plants are cost­ing you Rs 2.30 a unit (kw/hour) ex­tra in med­i­cal costs. We are not fac­tor­ing in that any­where. If you load that price to on coal plants, nat­u­ral gas be­comes com­fort­able.

In places like Delhi, gas is as com­pet­i­tive as coal be­cause of the trans­porta­tion cost of coal. The coal-based Badarpur power plant pro­duces power at Rs 5-6 while the In­draprastha gas plant can also pro­duce power at Rs 6. If you give tax in­cen­tives, gas­based power can also be gen­er­ated at Rs 5, with­out any pol­lu­tion.

It is much cleaner and meets your re­quire­ments. Nat­u­ral gas can be used as bal­anc­ing power for re­new­ables.

GAS TO­DAY NEEDS SOME SUP­PORT FROM THE GOV­ERN­MENT ON THE LINES OF THAT AVAILABLE TO RE­NEW­ABLE EN­ERGY. CUR­RENTLY, NAT­U­RAL GAS IN­VITES CUS­TOMS DUTY, EX­CISE DUTY AND VAT

BC TRI­PATHI, CHAIR­MAN AND MAN­AG­ING DI­REC­TOR, GAIL

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