The proposal of the Indian Oil Corporation (IOC) to de-commission its liquefied petroleum gas (LPG) import facilities at Kandla citing gross under-utilisation of its facilities by the industry has put a question mark on the construction of the Kandla-Samakhiali section of the Jamnagar-Loni LPG pipeline by the Gas Authority of India Ltd (GAIL). The construction of the pipeline is at an advanced stage.
GAIL has asked the ministry of petroleum and natural gas to intervene and ensure that the industry remains committed to utilise this section of pipeline. GAIL has also asked IOC to co-ordinate the industry estimates on throughput projections in this section of the pipeline.
The Phase-I of the Jamnagar-Loni LPG pipeline was commissioned during early 2001 with a transportation capacity of 1.7 million metric tonne per annum. The Phase-II of the project hooking up Kandla to Samakhiali was proposed for construction and completion in 2006-7 to increase the transportation capacity to 2.5 million metric tonne per annum to take care of the additional demand to be generated by then.
Though Phase-II of the project providing for Kandla-Samakhiali hook was proposed to be commissioned by 2006-07, the ministry advised GAIL to advance the construction of the section in January this year, based on the industry projections on the need to use IOC's import facilities at Kandla as an alternative source of supply for Jamnagar.
"The ministry and industry philosophy for advancing the project was not based on any supply-demand considerations but the rationale was to provide an alternative source of supplies via import at Kandla in the event of stoppage of supplies from Jamnagar refinery," a GAIL official said.
"We are not clear what has changed in the scenario for IOC to take the decision to de-commission Kandla import terminal facilities," he added.
GAIL had confirmed that the project would be immediately taken up as per the advise of the ministry and the requirement of the industry. "The construction work of the section is nearing completion. But we have not received any commitments for volumes to be moved through this section from the industry," the official said.