The government has agreed to partly fund the Rs 13,000-crore natural gas pipeline from Jagdishpur in Uttar Pradesh to Haldia in West Bengal, state- owned gas utility GAIL India said on Monday.
The government will provide Rs 5,176 crore or about 40 per cent of the project cost after the state-owned gas utility found it difficult to commercially justify the huge investment of Rs 12,940 crore in absence of either a firm source of gas supply or customers.
“The ministry of petroleum and natural gas vide letter dated October 7, 2016 has communicated the Cabinet Committee on Economic Affairs (CCEA) approval for 40 per cent capital grant (limited to Rs 5,176 crore) of the total estimated project cost of Rs 12,940 crore to GAIL for the execution of Jagdishpur-Haldia/Bokaro-Dhamra natural gas pipeline projects,” it said in a stock exchange filing.
The 2,539-km long pipeline from Jagdishpur in Uttar Pradesh to Haldia in West Bengal and also Bokaro in Jharkhand and Dhamra in Odisha will be completed by 2020.
GAIL said the project will be implemented in synchronisation with execution of three anchor load fertiliser plants at Gorakhpur in Uttar Pradesh, Barauni in Bihar and Sindri in Jharkhand. “The three fertiliser plants will enter agreement with GAIL within a defined timeframe,” the filing said.
Also, GAIL will develop city gas distribution network for supply of CNG to automobiles and piped cooking gas to households in Varanasi, Patna, Ranchi, Jamshedpur, Bhubaneswar, Kolkata and Cuttack in sync with the laying of the pipeline.
GAIL, the nation’s largest natural gas transporter, was formed in 1984 and has since laid about 14,000 kms of pipeline network on strength of its balancesheet and without any budgetary support from the government. This is the first pipeline project to be partly funded from the Budget.
GAIL’s pipeline brings gas from western offshore fields and fuel imported in Gujarat and Maharashtra right up to Jagdishpur. The new pipeline will take the gas first to Varanasi -- Prime Minister Narendra Modi’s Lok Sabha constituency -- and onwards to Bihar, West Bengal, Jharkhand and Odisha.
Also, an LNG import terminal is planned at Dhamra, which could also be a source of supply of gas to the five states.
The new pipeline will carry fuel to the shut fertilizer plants, three refineries at Barauni in Bihar, Haldia in West Bengal and Paradip in Odisha and provide fuel for city gas projects enroute.
The project will connect eastern part of the country with the National Gas Grid.