Jharkhand government, GAIL ink MoU for natural gas supply

GN Bureau | October 19, 2015


#PSU   #public sector   #Jharkhand   #GAIL   #Gas Authority of India Limited  


The Jharkhand government has cleared deck for commissioning work for the 450km natural gas pipeline in the state under the energy highway project.  The Raghubar Das-led NDA government signed a memorandum of understanding (MoU) with the Gas Authority of India Limited (GAIL) and promised all support in completing the second phase of the Rs 12,000 crore project within the 2019 deadline.

"GAIL will get all help from us. We will provide as much land it requires," Das said after the MoU was signed at the city-based Project Building. GAIL will set up a 174km main line and 165km spur line in Jharkhand as part of the 2,050km Jagdishpur-Phulpur-Haldia gas pipeline project connecting Uttar Pradesh, Bihar, Jharkhand and West Bengal. The project aims to connect eastern India to the national natural gas grid.

GAIL chairman-cum-managing director B C Tripathi said the pipeline will pass through six districts - Bokaro, Giridih, Hazaribag, Dhanbad, East Singbhum and Ranchi. "The total investment is estimated at Rs 2,500 crore," Tripathi said. Apart from the Jagdishpur-Haldia pipeline, GAIL is planning to set up another pipeline connecting Bokaro, Ranchi through Angul district in Odisha up to Paradeep, GAIL officials said.

However, the Ranchi-Angul pipeline will be developed under a public-private partnership, for which expression of interests have already been invited, Tripathi said. According to GAIL estimates, the natural gas demand in Jharkhand is estimated to reach 8.8 million metric standard cubic metre per day (MMSCMPD).

"Despite having plenty of fossil fuels, we are committed towards generating clean energy," Das said. "With the project in place, we will have clean energy for domestic households in our cities," he added. The proposed energy highway will provide natural gas for domestic use in Ranchi, Jamshedpur, Dhanbad, Bokaro, Dumka, Deoghar and Godda. Besides households, industrial establishments such as steel, power plants and other large and small-medium enterprises in the state are expected to get gas supply at cheaper rates.

The project in Jharkhand will crucially hinge on the future of Sindri fertilizer plant. "One of the foremost reasons of the energy highway is to feed the fertilizer plants in the eastern part of the country. There used to be six of them, but now many have closed down," a GAIL official said.

Regulator orders encashing 25% of GAIL’s bank guarantee

The Petroleum & Natural Gas Regulatory Board has ordered the encashing of 25 per cent of GAIL (India)’s performance bank guarantee for failing to achieve financial closure for the Surat-Paradip pipeline project.

The board found that GAIL failed to achieve financial closure for the project even after 42 months. The company had been given the authorisation to lay a 1,724-km natural gas pipeline from Surat in Gujarat to Paradip in Odisha in 2012.

On September 30, the board had passed an order for encashing 25 per cent of the bank guarantee. However, this order was challenged in the Delhi High Court by GAIL (India).

On October 10, the Delhi High Court gave the company one week to satisfy the PNGRB with respect to its financial capabilities, the regulator said in its October 13 order.

Following the development, PNGRB asked GAIL (India) to furnish proof of tying up funds from banks or a company resolution approving the allocation of funds for the project.

“On hearing the representative of GAIL, we find that neither any error in the order dated September 30 has been pointed out nor any resolution of the Board of Directors of GAIL has been placed before us and moreover, no other reason could be placed which could convince the Board to re-look into its earlier decision,” PNGRB said in its order.

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