Expanding Reach

Urja Gas Pipeline Project to supply gas to eastern India

Pipelines play a critical role in matching the supply of natural gas with demand. With natural gas consumption in the country slated to rise and the need to move towards a gas-based economy, the development of gas pipeline infrastructure is a top priority. The present natural gas transportation infrastructure in the country at over 16,225 km is concentrated primarily around the historical sources of gas production in the northern and north-western areas, while the eastern part still remains largely unconnected. Over the years, the government has approved a number of pipeline projects for improving the gas transmission network.

In July 2015, work on one of the biggest gas pipeline projects, the Jagdishpur-Haldia-Bokaro-Dhamra pipeline (JHBDPL) project, also known as the Pradhan Mantri Urja Ganga project, was commenced. The project is being developed in three phases by GAIL (India) Limited. Despite facing challenges in execution, Phase I of the project involving laying of 753 km of pipelines from Phulpur to Dobhi (including spur lines) has been completed. The country’s gas transmission pipeline length is likely to more than double given the government’s ambitious plans. In addition, new pipeline projects have been approved for regions that lack connectivity. Clearly, lack of trunk line infrastructure is not likely to impede growth in the medium term.

Project background

To enhance gas transportation infrastructure in the eastern and northern parts of the country, the government launched the JHBDPL project. While the authorisation for laying pipelines was granted by the Ministry of Petroleum and Natural Gas to GAIL (India) Limited in July 2007, the project was kept on hold due to non-execution of the Kakinada-Haldia pipeline by Reliance India Limited, fall in domestic gas production from the Krishna-Godavari (KG)-D6 block, delays in revival of fertiliser plants and lack of gas tie-ups with anchor load customers. It was only in July 2015 that the project was revived and the foundation stone laid. As part of the project, 2,655 km of gas pipelines were initially planned to be laid across five states – Uttar Pradesh, Bihar, Jharkhand, Odisha and West Bengal. However, later, 729 km of pipeline from Barauni to Guwahati was included. The entire project has a design capacity of 16 million metric standard cubic metres per day (mmscmd) and is being developed at an investment of Rs 149 billion.

Pipeline network and progress so far

For execution purposes, the entire pipeline network of 3,384 km has been divided into sections. Section 1 involves laying a 753 km long pipeline from Phulpur to Dobhi with spur lines to Bihar, Gorakhpur and Varanasi. Under Section 2A, a 400 km pipeline network will be laid from Dhamra to Angul with spur lines to Paradip, Bhubaneswar and Cuttack. Section 2B involves laying 500 km of natural gas pipelines from Dobhi to Durgapur with spur lines to Jamshedpur and Sindri. Under Section 3A, 667 km of pipelines will be laid from Bokaro to Angul. Section 3B involves laying a 335 km pipeline from Durgapur to Haldia along with a spur line to Kolkata. The last section, from Barauni to Siliguri, involves laying 729 km of pipelines.

Work on different sections is being carried out in a phased manner. Under Phase I, 341 km of trunk lines have been laid from Phulpur in Allahabad to Dobhi in Gaya. In addition, this phase involves providing spur line connectivity to Barauni and Patna from Dobhi covering a length of 413 km. As of February 2019, work on Phase I of the project has been completed. Initially, 110 km of gas transmission pipelines were laid in Varanasi in March 2018, followed by 230 km of spur lines in Bihar, that was completed in November 2018. Later, in January 2019, about 60 km of pipelines were laid in Chandauli, followed by the completion of the final section from Phulpur to Varanasi in February 2019.

Phase II works will comprise pipeline laying works in Sections 2A, 2B, 3A and 3B spanning a total length of 1,902 km. So far, the foundation stone for the 667 km long Bokaro-Angul section has been laid. This section involves a total investment of Rs 34.37 billion. About 367 km of pipeline will traverse across five districts in Odisha and another 360 km across six districts in Jharkhand. In April 2018, the contract for a 95.4 km pipeline, a part of the Bokaro-Angul section, was awarded to IL&FS Engineering and Construction Company Limited at a cost of Rs 7.8 billion. However, the contract was terminated in February 2019 owing to acute financial crises faced by the contractor. Another contract worth Rs 2.16 billion for pipeline laying works along the 157.8 km Dobhi-Durgapur-Haldia section (including 13.28 km long spur lines) was awarded to IL&FS in December 2017. This has also been terminated. To fast-track works, the work for the Dobhi-Durgapur pipeline was retendered and has been awarded to three different contractors, the names of which have not been revealed. Meanwhile, the contract worth Rs 14.53 billion for laying of steel pipelines for the Dhamra-Angul section was awarded to Punj Lloyd in December 2017 and works are currently in progress. Lastly, bids for the Durgapur-Haldia section with a spur line to Kolkata were invited in January 2019 and the contract for this is yet to be awarded. Works under this phase are slated to be completed by December 2020.

In Phase III, the extension work from Barauni to Guwahati (729 km) will be carried out. To take up works under Phase III of the project, the contract worth Rs 11 billion for purchasing 616 km of pipeline was awarded in November 2018. Earlier, in August 2018, the contract for purchase of 108 km of 24 inch diameter pipelines was awarded to Ratnamani Metals and Tubes Limited. The foundation stone for the project was laid on February 6, 2019 and work is currently in progress. Once completed, the pipeline will connect to the upcoming Indradhanush gas grid network.

Financing

The total project cost is estimated at Rs 149 billion. Phase I involved a cost of Rs 33.97 billion, while Phases II and II are being developed at a cost of Rs 95.43 billion and Rs 33.08 billion respectively.

A viability gap funding of Rs 51.76 billion was approved for the project by the government in September 2016. As of February 2019, a total capital grant of about Rs 20 billion has been received by GAIL. Besides, in the third quarter of 2018-19, funds amounting to Rs 5.78 billion were received from the government.

CGD to six cities

GAIL has been awarded six cities as part of the Pradhan Mantri Urja Ganga project – Varanasi, Bhubaneswar, Cuttack, Patna, Ranchi and Jamshedpur. The Urja Ganga pipeline will also supply gas to CGD networks in cities along the route. As per plans, about 10,335 inch-km of pipelines is targeted to be developed in these six geographical areas by 2020. Besides, there is a target of connecting 20 billion domestic users with piped natural gas (PNG) connections. In addition, 72 compressed natural gas (CNG) stations will be developed as part of the project. It aims to provide PNG to residents in the eastern region of the country and CNG for vehicles. Work on the project was launched in October 2016 and has been taken up at a cumulative investment of Rs 15.2 billion.

Progress so far

In terms of overall physical progress, as of February 2019, a 1,057 inch-km pipeline network has been laid in six cities. With respect to domestic connections, about 25,000 households have been provided access to piped gas. Further, 10 CNG stations have been set up and work on developing another 22 CNG stations is in progress. During 2018-19, a total 2,071 inch-km of pipelines was targeted to be laid in the six cities, of which, as of February 15, 2019 about 1,039 inch-km of pipelines have been laid, representing 50 per cent of the target. City-wise, about 472 inch-km of pipeline has been laid in Varanasi and about 108 inch-km in Bhubaneswar. Further, about 28 inch-km has been laid in Cuttack and 255 inch-km and 121 inch-km in Patna and Ranchi respectively. Another, 55 inch-km has been laid in Jamshedpur.

With respect to PNG connections, about 25,000 connections were provided during 2018-19 against a target of 30,000, with the maximum of 13,281 installed at Varanasi. Besides, of a total of 10 CNG stations, 4 have been developed in Bhubaneswar and two each at Varanasi, Cuttack and Patna. Of the six cities, the CGD network in Varanasi and Patna has been commercially operationalised. In July 2018, the CGD project in Varanasi was inaugurated followed by the inauguration of the CGD network in Patna in February 2019. In Bhubaneswar and Cuttack, the pipe laying work is in progress and is expected to be operationalised by December 2019. Meanwhile, work in Ranchi and Jamshedpur is also under way and is expected to be completed by 2020.

Conclusion

The most critical outstanding issue facing the gas sector relates to inadequate pipeline connectivity. Though the government has approved a number of pipeline projects for expanding gas transportation infrastructure, these projects are currently facing a lot of issues and challenges. After facing inordinate delays, Phase I of the JHBDPL project was completed in February 2019. The delays were a result of complexities in laying pipelines in densely populated and congested geographical areas. Land acquisition and right of way posed the biggest challenge and resulted in significant delays. Multiple permissions were required to change the location of existing underground utilities further impeding progress. This resulted in missed deadlines and cost escalations. Moreover, shortage of skilled and experienced manpower, presence of high-rise apartments and hindrances to road digging works delayed project completion as well. As a result, to ensure timely completion of works proposed under Phases II and III, measures such as setting up of a single-window clearance system and spreading consumer awareness about the benefits of improving pipeline connectivity are being undertaken. Also, measures such as adequate funding from the government, better coordination among stakeholders, linking payment to performance of contractors, simplifying the process of obtaining statutory approvals, and reducing delays caused by obstructions to road digging works and shifting of utilities will go a long way in the timely execution of pipeline projects.

GET ACCESS TO OUR ARTICLES

Enter your email address