The country’s primary energy basket is dominated by coal and oil that have a combined share of about 86 per cent. In contrast, the share of gas in the energy mix is only about 6 per cent. In order to address the trilemma of achieving higher energy access along with ensuring high energy security and sustainability, the government has been focusing on transitioning towards a gas-based economy in the past few years. It aims to increase the share of gas in the primary energy mix to 15 per cent by 2030. To achieve this, it plans to develop additional gas infrastructure capacity through the National Gas Grid, the Northeast Gas Grid, new liquefied natural gas (LNG) import facilities, and setting up of city gas distribution (CGD) networks.
As of April 2020, the total gas pipeline network (excluding CGD networks) stood at 16,981 km with a carrying capacity of 387 million metric standard cubic metres per day (mmscmd). GAIL (India) Limited is the market leader. It has a network spanning 12,160 km with a capacity of 246 mmscmd. It is followed by Gujarat State Petronet Limited and Pipeline Infrastructure Limited, with network shares of about 15.9 per cent and 8.7 per cent respectively. The gas pipeline infrastructure is mainly concentrated in the western and northern parts of the country. However, the government is paying attention to under-penetrated markets such as the northeastern region to increase gas availability across the country. It is pursuing big-ticket projects such as the PradhanMantriUrja Ganga pipeline and the Northeast Gas Grid expeditiously. The 2,655 km Jagdishpur-Haldia-Bokaro-Dhamra pipeline (JHBDPL) and the 729 km Barauni-Guwahati pipeline are being executed by GAIL under the PradhanMantriUrja Ganga Yojana to connect eastern India to the gas pipeline network.
Under Union Budget 2020-21, the government has laid down plans for the expansion of the National Gas Grid to 27,000 km from the present 16,200 km. As of February 2020, about 7,000 km of pipeline length is under construction. CGD projects too are expected to add to the steel pipeline infrastructure. In addition, the central government has allocated Rs 55.59 billion for the construction of the Northeast Gas Grid project by Indradhanush Gas Grid Limited across the states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura. The Cabinet Committee on Economic Affairs has approved the project with a viability gap funding of 60 per cent of the estimated cost of Rs 92.65 billion, including interest during construction. The project is slated for completion by December 2022.
Further, the Petroleum and Natural Gas Regulatory Board has authorised 228 geographical areas, thereby expanding the CGD network across 406 districts spread over 27 states and union territories, covering 70 per cent of the population and 53 per cent of the country’s area. It aims to have 175,000 km of CGD pipelines by 2030.
Key challenges
It has become increasingly essential to put in place adequate infrastructure in order to meet the growing demand for oil and natural gas. However, despite the huge demand, pipeline capacity remains underutilised by as much as 50 per cent while new pipeline additions remain slow due to lack of return to network developers. Besides, most of the domestic gas flowing through these pipelines comes from the western offshore finds, except for a few sources in the east (Assam and Tripura). The other huge challenge faced by players in the pipeline segment is the acquisition of right of use and right of way. Further, CGD infrastructure creation requires several permissions, and has high restoration charges and high land cost in cities. There is also an urgent need to address legacy issues relating to gas availability, slow volume build-up, land acquisition and securing of requisite clearances, as well as sluggish development.
That said, the government must concentrate on developing integrated gas infrastructure, forming a robust regulatory framework, ensuring a stable fiscal policy, promoting and supporting investments and ensuring timely execution of pipeline projects in order to meet the ultimate goal of transitioning to a gas-based economy.