The share of natural gas in India’s energy basket currently stands at around 6.3 per cent. The country is working towards increasing it to around 15 per cent by 2030. The global average share of natural gas in the energy basket currently stands at 24 per cent. A major requirement for increasing natural gas demand is the development of a nationwide pipeline transmission network. At present, India has a 17,900 km operational natural gas pipeline network, with another 16,600 km under construction.
The pipeline network in India is currently concentrated in the northern and western regions. Hence, the government is now focusing on developing pipeline infrastructure in the eastern and southern regions of the country. However, development of pipeline infrastructure attracts limited participation due to its huge upfront investment costs and low returns. Although the government has given special attention to gas infrastructure development across the country, progress remains slow. Currently, the lion’s share of the pipeline network belongs to GAIL (India) Limited, which has laid around 72 per cent of the country’s total pipeline network. Moreover, nearly 50 per cent of the under-construction pipeline network is also being developed by GAIL (India) Limited.
Recent developments in pipeline infrastructure
The government has planned to expand the pipeline network from the current 17,900 km to nearly 34,500 km over the next four to six years. The development of a national gas grid is crucial for India, as it will provide an impetus to the government’s plan of establishing a gas-based economy. The pipeline grid will not only help in improving access to clean energy, but will also facilitate the development of city gas projects.
Of the 16,600 km of gas pipelines under construction, the key projects are the Jagdishpur-Haldia and Bokaro-Dhamra pipeline (JHBDPL); the Baruni-Guwahati pipeline (BGPL); the Dhamra-Haldia pipeline; the Vijaipur-Auraiya pipeline; the Sultanpur-Jhajjar-Hissar section of the Chainsa-Jhajjar-Hissar natural gas pipeline; the Haridwar-Rishikesh-Dehradun section of the Dadri-Bawana-Nangal pipeline; the Srikakulam-Angul pipeline; the Mumbai-Nagpur-Jharsuguda pipeline; the Northeast gas grid; the Kakinada-Vizag-Srikakulam pipeline; the Ennore-Thiruvallur-Bengaluru-Puducherry-Nagapattinam-Madurai-Tuticorin pipeline; and the Nellore-Vizag-Kakinada pipeline.
The ongoing JHBDPL and BGPL projects are expected to boost gas consumption in the eastern parts of the country. JHBDPL has a length of around 2,655 km, whereas BGPL has a length of 729 km. The JHBDPL project has been divided into five sections: Section 1 (753 km), which runs from Phulpur Dobhi to Bihar, Gorakhpur and Varanasi; Section 2A (400 km), consisting of the Dhamra-Angul pipeline and spurlines to Paradip, Bhubaneswar and Cuttack; Section 2B (500 km), consisting of the Dobhi-Durgapur pipeline along with a spurline to M/S Matix, Jamshedpur and Sindri; Section 3A (667 km), running between Bokaro and Angul; and Section 3B (335 km), consisting of the Durgapur-Haldia pipeline along with a spurline to Kolkata.
Currently, construction work on Section 2A is in progress and is expected to be completed by December 2021. Further, pipeline-laying work is under way for Section 3A and tenders have been invited for Section 3B. Tenders for all sections of the BGPL project have been awarded, and construction work is in progress.
Significant progress has been made in developing pipeline infrastructure in the southern region of the country as well. The 450 km long Kochi-Koottanad-Bengaluru-Mangaluru pipeline was commissioned in November 2020. It has a capacity of 16 mmscmd and was developed at a cost of Rs 59 billion.
Key challenges and the way forward
The Petroleum and Natural Gas Regulatory Board has granted authorisation for laying an additional 16,600 km of natural gas pipeline in the country; however, physical progress on some of these pipelines is happening at a snail’s pace. This is because there is little incentive for pipeline companies to lay gas pipelines given the low returns. Moreover, the low utilisation of recently laid pipelines has led to financial stress on pipeline companies, due to which they are not keen on venturing into new pipeline-laying projects. Other challenges that have hampered the development of pipeline infrastructure in the country include issues with land acquisition for right of use, high pipeline tariffs for new customers, and duplication of pipeline assets along the national gas grid.
Going forward, there is a need to develop dedicated gas pipeline utility corridors across India to promote the adoption of natural gas. There is also a need to redefine the statutory policy framework to ensure reasonable post-tax returns, and make pipeline infrastructure development an attractive segment. Further, financial support, in the form of capital grants and viability gap funding, must be provided for pipeline projects.
Based on a presentation by Ashu Shinghal, Chief General Manager, GAIL India, at a recent India Infrastructure conference