GAIL (India) has decided to cancel contracts worth ₹210 crore for laying the 310-km Tamil Nadu stretch of the Kochi-Kottanad-Mangalore-Bangalore gas pipeline.

The State-run company has spent ₹650 crore on contracts, which included pipe procurement and laying the pipes for this (Tamil Nadu) stretch. The total pipeline project cost was estimated at ₹3,200 crore.

“A decision to this effect was taken by the board of the company recently,” said BC Tripathi, Chairman and Managing Director, GAIL. But a decision on whether the company will finally abandon the Tamil Nadu portion of the project will depend on the outcome of the Supreme Court case. The project, which was supposed to pass through seven districts of Tamil Nadu, a distance of 310 km covering 134 villages, 505 km in Kerala and 85 km in Karnataka, has been facing trouble in Tamil Nadu on concerns of damaging farm land.

“While the matter is sub judice, we have approached the State Government once again to reconsider the restriction imposed on GAIL for laying the network,” Tripathi told Business Line .

State support

Following protests (by farmers), the Tamil Nadu Government has declared that GAIL would have to stop laying the pipeline across farm fields and instead align it with highways.

Tripathi said it is difficult to give the immediate financial implications of terminating the contractors.

“It’s only when we invite re-bids for laying the network that we will know. Material procurement is 70 per cent of the total project cost. And we are preserving the material.”

This disruption is not only impacting GAIL, but also Petronet LNG’s Kochi LNG terminal for which GAIL is unable to complete the gas exit route.

In the beginning, the State Government had extended support, as no network can be laid without its help, Tripathi said. With State support, GAIL has been able to lay the 60-70-km initial stretch.

Related Topics