Govt to develop gas pipeline network to utilise K-G Basin resources

In a bid to utilise natural gas resources available in the Krishna-Godavari (K-G) Basin within Andhra Pradesh, the state government has decided to develop a gas pipeline network under public-private participation before the commencement of production in the year 2008.

Announcing the decision here on Tuesday, K Rosaiah, state finance minister, said that all the companies, including Reliance, which announced the production of over 40 MCMD of gas from the year 2007-08, will be asked to use the same pipeline network to evacuate and supply gas to the consumers.

"We have instructed the officials to prepare a draft plan for the implementation of the pipeline network project at the earliest," the minister said, adding that necessary legislation will be enacted to ensure the gas companies to use this infrastructure.

The government's move is aimed at compelling Reliance and other companies which found gas reserves in the K-G Basin, to supply their gas, mostly in Andhra Pradesh, before taking it to other parts of the country.

The strategy appears to be that the pipeline network, with the government's equity participation, will ensure some control over the gas. As of now, the state government has no powers to ensure gas supply within the state.

According to Rosaiah, a separate entity will be constituted for the implementation of gas pipeline network. The newly created infrastructure department will work out the modalities for the proposed public private partnership.

A regulatory mechanism for the pricing and supply of gas at the state level will also be considered at a later date, the minister said after a review meeting on the energy sector which was chaired by chief minister Y S Rajasekhara Reddy today evening. The pipeline project will cover both industrial and domestic consumers, the minister said.