India’s quest to increase the share of natural gas in the overall energy mix hinges crucially on the timely development of pipelines across the country. While the western, southern and most of the northern parts of the country have fairly dense pipeline networks, areas such as the east and some parts of the north have lagged behind by a quite a wide margin for a very long time.
This gap is slowly being filled by the Pradhan Mantri Urja Ganga (PMUG) pipeline project, works for which are currently under execution by GAIL (India) Limited. Slated for completion by next year, the pipeline will form a crucial part of the network that will provide connectivity to another flagship project, the North-East Gas Grid.
The PMUG project comprises two pipelines – the Rs 129.4 billion Jagdishpur-Haldia-Bokaro-Dhamra pipeline (JHBDPL) with a length 2,655 km and the Rs 33.08 billion Barauni–Guwahati pipeline (BGPL) with a length of 729 km. The pipeline network will have a capacity of 16 million metric standard cubic metres per day (mmscmd) and will include 189 terminals.
Of the total pipeline network of over 3,380 km, 766 km will be in Odisha and about 2,618 km will span across Uttar Pradesh, Bihar, Jharkhand, West Bengal and Assam. The project is the first gas pipeline in the country to have received viability gap funding to the tune of 40 per cent of the project cost, amounting to Rs 51.76 billion.
Launched in 2015, the PMUG is being implemented in three phases. The network, through its spur lines aims at placing cities such as Gorakhpur, Varanasi, Patna, Sindri, Durgapur, Samblapur, Jamshedpur, Rourkela, Cuttack, Bhubaneswar, Paradip, Kolkata, Bongaigaon and Guwahati on the country’s natural gas map. Progress in this regard is under way, as many these cities have already started receiving gas through the PMUG network.
Gas supply and demand
The PMUG project has a number of points for gas sourcing. The pipeline network will draw gas from sources such as Phulpur (Allahabad), the Dhamra re-gasification liquefied natural gas terminal in Odisha, and Essar Oil and Gas Exploration and Production Limited’s coal bed methane block located in the Raniganj east block in West Bengal.
On the consumption side, there are a number of target sectors. These include fertilisers, steel, refinery, power (particularly in Assam), city gas distribution (CGD), and some small industrial units. In the fertiliser sector, cities such as Gorakhpur, Sindri, Barauni and Durgapur will be the key demand centres. With regard to the refining segment, Indian Oil Corporation Limited’s facilities at Barauni, Haldia, Bongaigaon and Guwahati will be some of the biggest consumers. Besides, petrochemical units such as those of Paradeep Phosphates Limited (Bhubaneswar), Mitsubishi Chemical Company Limited (Haldia) and Haldia Petrochemicals, among others, are also potential consumers of the gas to be transported through the PMUG.
A major source of consistent gas demand will be the CGD segment. All the geographical areas (GAs) along the PMUG are expected to be fed by the pipeline. GAIL, the developer of the PMUG pipeline, has been authorised to develop CGD infrastructure in Cuttack, Ranchi, Jamshedpur, Varanasi, Bhubaneswar, Patna and Kolkata. Among these, Jamshedpur’s CGD project was inaugurated in November 2019, while works at Ranchi and Kolkata are under way. CGD networks are already operational in Cuttack, Bhubaneswar, Varanasi and Patna.
Some of the key contracts signed by GAIL to deliver gas through the PMUG are those with Hindustan Urvarak and Rasayan Limited for 5.61 mmscmd of gas and Matix Fertilisers and Chemicals Limited to supply about 1.5 mmscmd through the JHBDPL.
Budgetary support and expected timelines
The estimated budget allocated for the PMUG project in 2019-20 is Rs 35.5 billion, of which Rs 13.22 billion (only 37 per cent of the total) was actually spent till September 2019. In 2018-19, actual budgeted capital expenditure incurred was Rs 45.5 billion, significantly higher than the Rs 16.48 billion incurred in 2017-18.
Meanwhile, since the start of the project, GAIL has committed over Rs 125 billion towards project implementation activities carried out so far. In May 2019, the company completed the process of awarding all major contracts for the project. With regard to the project schedule, the entire PMUG project is expected to be completed by December 2021. While sections 2A, 2B, 3A and 3B are expected to be completed by December this year, works on the BGPL are expected to finish a year later. Timely completion of the pipeline will be critical for operationalisation of GAs that are located along the network and plan to source gas from the PMUG.
GAIL has deployed state-of-the-art technologies at both the implementation and operational stages (that is, on commissioned sections) of the pipeline project. During project implementation, applications for web and mobile-based project monitoring have been deployed, in addition to a control dashboard. These enable tracking of actual progress of pipeline development in real time across a number of variables (land acquisition, tendering status, etc.), facilitating quicker decision making. The company also uses a centralised supervisory control and data acquisition system for all its cross-country pipelines, including the PMUG.
Like any other typical pipeline project, the PMUG too has faced a number of issues. These include geological challenges, congested areas, land-related issues, local resistance, delays from suppliers, lack of skilled manpower, securing of multiple clearances, and bureaucratic indolence. Yet, the project is largely on schedule and is expected to adhere to its 2021 deadline.
In a bid to become a gas-based economy, India has embarked on projects such as the PMUG, which are expected to improve pipeline connectivity in underserved areas. Despite some hurdles and slippages, the project is progressing at a fairly decent pace. That said, some measures from the concerned state governments such as grant of single-window clearances and greater support with regard to land-related issues can set an example for similar projects such as Indradhanush Gas Grid (or the North-East Gas Grid). It is time some best practices with regard to gas pipeline development are established, so that increasing the share of gas in the energy mix is less challenging going forward.