You are here: Home » Companies » News
Business Standard

GAIL ends LNG pipeline contract in Tamil Nadu

In wake of SC's January stay on the Mangalore-Kochi line, after state cultivators and Jaya govt petitioned

T E Narasimhan & Gireesh Babu  |  Chennai 

In the wake of a stir by farmers in seven districts of Tamil Nadu against construction of the Rs 3,400-crore Kochi-Mangalore liquefied natural gas pipeline on their lands, GAIL India has decided to cancel the contract awarded to build it in the state. The state government supports the farmers stir; the matter is currently before the Supreme Court.

Responding to of the pipeline contract cancellation, P Kandaswamy, general secretary of the non-political Farmers Association, said: “It is just interim relief. Till the (Union) government withdraws the (Petroleum and Minerals Pipelines) Act, we will not rest. If not GAIL today, some other company will come under the Act’s umbrella tomorrow.”

If SC decided to favour GAIL, the latter would again start the project, he noted. A GAIL senior confirmed the contract had been cancelled but refused to say more on this.The pipeline is to connect the LNG terminal in Kochi to Karnataka (Bangalore and Mangalore) via the Tamil Nadu districts of Coimbatore, Erode, Tirupur, Namakkal, Salem, Dharmapuri and Krishnagiri, comprising 310 km in the latter state.

It affects 137 villages and 5,000 acres of farmland directly, plus another 50,000 acres indirectly, say the farmers. They have demanded the route be along the national highways, not across their land. GAIL has invested Rs 600 crore already for laying the pipeline in Tamil Nadu, including allocation of a contract for Rs 200 crore. The cancellation might also lead to a legal dispute between the contract company and GAIL, say sources.

Besides, since the Kochi LNG terminal would be ready, evacuation of the gas would be another issue for the company. With the steel pipes having been already purchased, there would be other losses.

One alternative to an SC order is for GAIL to work with the state government to take the project forward. Chief Minister J Jayalalithaa has said it will not allow the project if it affects farmers. The case before the SC was filed by both the farmers and the state government; this was after the high court here had quashed a state government notification to stop GAIL. The SC ordered a stay in January and asked GAIL and the Union government to answer various questions. It has also asked GAIL to look at taking the line adjacent to the national highways.

First Published: Wed, April 23 2014. 00:46 IST