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RGTIL loses rights to lay gas pipelines

Cites inordinate delays in construction of the 2,175-km lines as reason

BS Reporter  |  New Delhi 

Ending months of uncertainty, the government has cancelled authorisations issued to Mukesh Ambani’s privately held firm to lay down four gas pipelines totalling 2,175 km. The company, Reliance Gas Transportation Infrastructure Ltd, or RGTIL, had authorisation for building four trunk pipelines — Kakinada-Haldia, Kakinada-Chennai, Chennai-Tuticorin and Chennai-Bangalore-Mangalore — set to be completed this year.

Confirming this, a petroleum ministry official said the formal cancellation order had been issued earlier this month. Downstream oil sector regulator Petroleum and Natural Gas Regulatory Board had been pushing for cancellation of the authorisation given to RGTIL.

Relogistics Infrastructure Ltd (Relog), a subsidiary of RGTIL, had in 2007-08 won the mandate to build these pipelines. However, it did not make much progress in construction, citing non-availability of gas.

  • The government has cancelled authorisations issued to RGTIL to lay down four gas pipelines of 2,175 km
  • RGTIL had not made much progress in its pipeline construction, citing non-availability of gas
  • It told the ministry that in view of falling output from KG-D6 and other eastern offshore gas fields, it did not make economic sense to construct the pipeline

RGTIL had been maintaining it was in a position to complete the pipelines in two years, but wanted to synchronise construction with gas sourcing. KG-D6 and other eastern offshore gas fields were supposed to be the source of fuel for the pipelines, but in view of falling output, and no other field coming on stream in the near future, it did not make economic sense to construct the pipeline, RGTIL told the ministry in a review meeting in May.

RGTIL operates a 1,400-km gas pipeline network in the country. Of the nine authorisations granted by the government for 5,523 km of pipelines in 2007, Relog won four, spanning 2,175 km. The remaining five pipelines, covering a distance of 3,348 km, are with GAIL India. The government-owned company has started work on four.

The two were required to complete the pipelines within 36 months of the notification of expression of interest, or 24 months from the date of 100 per cent availability of right of user (RoU), whichever is later. RGTIL had RoU and environmental clearances for all four authorised pipelines, but wanted to rework the pipeline sizing for optimisation of capacity. However, the ministry did not agree to it. The 36-month period expires in October.

The government has been taking a tough stand on projects of Mukesh Ambani-controlled Petroleum minister Jaipal Reddy yesterday said his ministry was not convinced of the geological reasons cited by Reliance Industries (RIL), the country's biggest private sector petroleum company, to justify the declining output from the KG-D6 gas field. The petroleum ministry on May 2 had struck down RIL’s plan to recover $1.2 billion in costs before the company started sharing profits with the government from its gas field off the Andhra coast. The ministry disallowed the costs recovery from the KG-D6 gas field because of RIL’s failure to meet drilling commitments and blamed the company for violating production-sharing contract obligations.

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First Published: Thu, October 11 2012. 00:38 IST