RGTIL to lease out space on East-West line to third parties

Billionaire Mukesh Ambani-led Reliance Gas Transportation Infrastructure Ltd (RGTIL) will lease out a fourth of the capacity on its East-West pipeline that ferries natural gas from KG-D6 fields on the east coast to customers in the west, to third parties.

Oil regulator Petroleum & Natural Gas Regulatory Board (PNGRB) has fixed 21.25 million standard cubic metres per day capacity out of a total of 85 mmscmd capacity on the pipeline that travels from Kakinada in Andhra Pradesh to Bharuch in Gujarat, as common carrier capacity.

Common carrier capacity is the capacity available to third parties for hire in an infrastructure project.

PNGRB in a March 19 order said, "the maximum achievable capacity of East-West Pipeline of 1,460-km length and diameter ranging from 8 inches to 48 inches under steady state conditions is equal to 85 mmscmd... The common carrier capacity would thus be 21.25 mmscmd."

As per the order, third parties can transmit as much as 21.25 mmscmd of gas through the pipeline on payment of PNGRB approved transportation tariff.

RGTIL will be entitled to get Rs 15 per million British thermal unit to Rs 60.94 per mmBtu transportation tariff for varying length of distance.

PNGRB order said RGTIL would have to take prior approval of the regulator for creation of any lien or charge or hypothecation on assets of the pipeline to secure finances for the project and would be required to furnish details of utilisation of funds.

"However, in case of raising funds from any financial institution or bank, the entity will be required to only inform the Board of the sanction of the funds, within a period of seven days," the order said.

East West Gas Pipeline (EWPL) transports gas from Kakinada, the landfall point of KG-D6 gas, to Bharuch and traverses through Andhra Pradesh, Karnataka, Maharashtra and Gujarat.

The current gas source for EWPL is the discoveries made in the KG-D6 block of Reliance Industries Ltd. The KG-D6 block is located 30 to 50 km offshore of the east coast of India and operated by RIL. RIL has set up an Onshore Terminal at Gadimoga near Kakinada for receipt of gas.

The EWPL takes the gas from their for customers up to Gujarat.

The gas discoveries by Oil and Natural Gas Corp (ONGC) and Gujarat State Petroleum Corp (GSPC) in the neighbouring blocks of KG-D6 are also potential sources of gas in the near future.