Petronet will be ready with its LNG terminal in Kochi by January. But if back up infrastructure facilities — mainly pipeline — are not in place by then, Kerala’s dream of getting natural gas may be delayed.
Stakeholders in the venture, such as Kochi port, GAIL Petronet LNG and major consuming units, are concerned over the delay in laying pipelines to move the gas to the consumers.
At an interaction with the media recently, officials said that if the delays continue with pipeline laying in Kerala, Mangalore may get connected from Tumkur on the Dhabol-Bangalore pipeline, depriving Kerala of the Koottanad-Mangalore stretch of the gas pipeline.
The gas pipeline from Dhabol to Bangalore is fast progressing, they said. In fact, the officials were of the view that Kerala’s industrial friendliness is likely to suffer if the State lags behind in implementing GAIL pipeline to transfer gas from the Kochi LNG terminal.
K.P.Ramesh, Deputy General Manager (Construction), GAIL, said that phase II of the 900 km pipeline to Mangalore and Bangalore involving an investment of Rs 3,400 crore was badly held up. He said only 4 km is in place, adding that 505 km of this pipeline passes through Kerala, 310 km through Tamil Nadu and 85 km through Karnataka.
Logistical issues
The GAIL pipeline is passing through seven districts in Kerala.
He said that issues such as adequacy of compensation for land, timely payment, and problems connected with Kerala Conservation of Paddy Land and Wetland Act, 2008, need to be sorted out.
The work is not likely to progress unless the district collectors are made responsible. He expressed the hope that if the issues are sorted out, pipeline laying could be completed in one year.
Phase I of the 43-km-long pipeline in and around Kochi for seven major customers, including the Fertilisers and Chemicals Travancore Ltd (FACT), Hindustan Organic Chemicals Ltd and BPCL-Kochi Refinery, has been completed by GAIL.
Paul Antony, Chairman, Cochin Port Trust, said that the LNG project has the potential to transform the industrial and domestic sector in the State with the availability of cheaper gas. “We must do our best to use it,” he said.
New customers needed
Of the total five million tonnes per annum capacity of the terminal, only 0.35 million tonnes per annum is ready for sale. There is a need to attract new customers who are interested in sourcing the gas.
Though the largest consumer is FACT, the switch over to gas will happen only if the Government approves differential subsidy for use of re-gassified LNG for production of phosphate fertilisers. The issue is still under consideration of the Department.
Urging the State Government to take up the issue for a speedy resolution with the Centre, the Port Trust Chairman pointed out that it was the State Government which stands to gain on account of huge amounts as tax revenue.
At the current 13.5 per cent value-added tax, this would amount to more than Rs 2,000 crore in a year.
However, he added that this revenue will flow into Kerala only if the gas flows in the pipeline and the Government needs to expedite the long-pending pipeline work.
Collateral benefit
Besides, the setting up of Puthuvypeen PLL-KSEB joint venture power plant is expected to achieve some stability in power supply as the State is reeling under power shortage. LNG has great potential as a substitute for liquefied petroleum gas (LPG) as a cooking fuel in the context of the rising prices of crude oil, he added.
P. Khetarpal, Senior Vice President, Petronet LNG Ltd, said that the Rs 4,300 crore terminal will be ready to receive gas by the beginning of January 2013. “We are ready to bring LNG and supply. But consumers are not ready to take it,” he said.
He added that 98 per cent of the work has already been completed at the project site. "The remaining work is only connected with dredging the channel and will be ready by the end of this year,” he said.
The road blocks have to be removed on a war footing if Kerala’s dream of getting gas by early January has to become a reality.