Andhra pipeline proposals may be put up for bidding

GAIL now proposes a joint venture with state govt-owned company.

The petroleum regulatory board may put the contentious Andhra pipeline proposals through a bidding process, following a three-way dispute among Reliance Industries Ltd (RIL), GAIL Ltd, AP Gas Infrastructure (APGIC). Reversing its earlier stand, the Union government-controlled GAIL has proposed forming a joint venture with the Andhra government-owned company for jointly constructing gas pipelines.

GAIL had earlier opposed the proposal for a new pipeline from Kakinada to Srikakulam floated by APGIC, claiming the pipeline was a replication of GAIL’s proposal for providing connectivity from Kakinada to Vishakapatnam from its existing KG Basin pipeline network. The change in GAIL stand was conveyed at an open house held by the regulator on Wednesday. However, RIL has maintained its earlier opposition, since the pipeline runs through the same route as RIL’s Kakinada-Haldia pipeline.

The three companies — GAIL, APGIC and RIL — have sought 15 days’ time to get back with their concrete comments. If the Board decides to bid out the pipeline authorisation, RIL will have to compete and end up losing authorisation for two pipelines.

The Board on Wednesday asked RIL to give a commitment on whether it is going ahead with the two trunk pipelines (1,100 km Kakinada-Basudebpur-Howrah pipeline and the 577 km Kakinada-Chennai pipeline), for which authorisation was given by the central government in 2007. Both the pipelines proposed by APGIC run parallel with RIL’s proposed pipeline.

At the open house conducted by downstream petroleum regulator Petroleum and Natural Gas Regulatory Board (PNGRB), GAIL and APGIC informed they were forming a joint venture company. “Both the companies will approach their boards for a formal decision,” said a board official.

RIL had also opposed the proposal of APGIC to build another gas pipeline from Ennore to Nellore and suggested for its rejection. Commenting on the EoI of APGIC, RIL said the route of this pipeline was the same as the Kakinada-Chennai pipeline for which authorisation had been granted to RGTIL.

Since APGIC has floated EoI for smaller areas, the Board also asked APGIC if it would have any objection to the idea of bidding for the whole stretch of the two pipelines instead of portions since that would help in forming a national gas grid.

APGIC, a joint venture of AP Industrial Infrastructure Corporation and AP Genco, had issued an expression of interest (EoI) to build a pipeline from Kakinada to Srikakulam. The region forms a part of the 1,100 km Kakinada-Basudebpur-Howrah pipeline (KBHPL) whose development was authorised in 2007 by the petroleum ministry to Reliance Gas Transportation Infrastructure Ltd (RGTIL), a RIL group company.

This was before October 2007 when downstream petroleum sector regulator PNGRB came into being.