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Viability gap funding can help double total gas lines: OilMin

Ahead of the second meeting called by Prime Minister Narendra Modi to review infrastructure progress, the Oil Ministry is proposing viability gap funding to meet the target of doubling gas pipeline network to 30,000 km.

Finance Minister Arun Jaitley had in his maiden Budget in July outlined NDA government's ambition to double gas pipeline network to 30,000 km in next few years. New pipelines, however, have not moved from drawing board level to execution stage as developers questioned their viability in absence of gas supply source and customers.

Speaking at PetroFed Oil & Gas Awards, Oil Secretary Saurabh Chandra said the country has over 15,000 km of gas pipelines and another 11,000 km has been authorised by the Petroleum and Natural Gas Regulatory Board (PNGRB).

'For the remaining 4,000-km, a PPP model is being looked at. We are working very closely with PNGRB to give shape to this model,' he said.

The authorised pipelines like the Paradip-Surat line of Gujarat State Petroleum Corp (GSPC), are not taking off because of uncertainty about supply source and customers, he said.

To overcome this, a viability gap funding (VGF), similar to such support given to roads and airport projects, for cross-country gas pipelines is being considered.

Chandra said already work on the long delayed Jagdishspur-Haldia pipeline has started with state gas utility GAIL India Ltd ordering route survey.

Modi will hold a meeting with senior officials of the Petroleum Ministry to review the progress made in the gas transport infrastructure on 10 September.

Chandra said for energy security of the country, exploration effort has to be stepped up. Only half of the sedimentary basins in the country have so far being surveyed for oil and gas potential and the ministry now plans to cover the remaining 50 per cent in next five years.

Since 2000, the government had awarded 252 blocks for exploration of oil and gas and signed production sharing contracts (PSC) but only 100 have surveyed and there are several arbitrations, he said adding increasingly it was being felt that a change in regime is required.

The ministry has now floated a model revenue sharing contract which will replace the controversy-ridden PSC, he said.

In the new model, bidders offering the highest amount of oil and gas to the government will win the block or an area for exploration and production. This is unlike the present PSC regime where bidders quoting the highest amount of work get the block.
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