Gas highway authority plan put on back burner

The petroleum ministry has put on back burner the proposal to create a national gas highway development authority, following an opposition from the Petroleum and Natural Gas Regulatory Board, which currently has the powers to authorise pipelines.

"We are not going ahead with the proposal as of now. We already have pipeline connectivity in the northern and western regions. By 2012, large areas of southern region will also get covered as a result of new pipelines that are being set up by GAIL and Reliance Gas Transportation Infrastructure Ltd (RGTIL). Some pipelines are also coming up in the eastern region. With all this, the country will have a gas grid by 2012-2013 to ensure gas supply," said a senior ministry official.

In his Budget speech last year, Finance Minister Pranab Mukherjee had said the government proposed to develop a blueprint for long-distance gas highways, leading to a national grid to facilitate transportation of gas across the country. In December 2009, the petroleum ministry had circulated a draft note among various ministries and departments to seek responses. PNGRB, however, opposed the proposal, as a gas highway authority would have curbed the board's power under PNGRB Act to authorise entities to lay, build, operate or expand city or local natural gas distribution network.

The ministry and the board have not been on the best of terms, especially since the ministry has not yet notified Section 16 of the PNGRB Act, which empowers the board to issue authorisation to companies for laying natural gas pipelines. The board is also locked in a legal dispute with the government-owned Indraprastha Gas Ltd.

With the recent natural gas find in the Krishna-Godavari (K-G) basin in the eastern offshore of the country, indigenous production is set to double and natural gas emerge as an important source of energy. LNG infrastructure in the country is also being expanded. Current domestic gas production is estimated at about 160 million standard cubic metres a day (mscmd) and is set to increase with a production ramp-up by Reliance Industries' KG-D6 block from 62 mscmd at present to 80 mscmd later this year.

At present, the bulk of gas consumption is accounted for by the western and northern states, while the eastern and southern states are lagging due to low gas pipeline density. The government is keen to expand the pipeline network to bring down the considerable inter-state disparity in gas consumption.