GAIL should focus on pipelines, not marketing, says Petroleum Minister Dharmendra Pradhan

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The Centre is of the view that state-run GAIL (India) should focus on creating gas pipelines in the country and not on marketing, petroleum minister Dharmendra Pradhan said on Tuesday. Responding to a question on reports that GAIL may hive off its marketing business, Pradhan told reporters, “GAIL’s primary work has been prioritised as pipelines and marketing can be done by anyone, but a state-company should concentrate on infrastructure. We expect GAIL to make gas infrastructure in the country at a fast pace.” GAIL has a pipeline network of 11,000 km in India accounting for three-fourth of the natural gas transmission. In 2016-17, the company earned 70% of its revenue through marketing whereas 40% of profits came from natural gas transmission business. GAIL is the executing agency for the Centre’s Urja Ganga Project which aims to provide gas infrastructure in the eastern states. For the first time, the current government has provided viability gap funding for a gas pipeline. “We are committed to take India towards a gas-based economy. We believe that in the country, especially the eastern part, the requirement of gas infrastructure was neglected. GAIL being a gas infrastructure company should focus on east India,” Pradhan added.

He also said that when the steel clusters of eastern India—Jharkhand, Odisha, Chhattisgarh, West Bengal and Bihar—will start producing gas-based steel, the quality will improve. “It will boost the manufacturing sector having a cascading impact. GAIL has been assigned the work to build the infrastructure and we expect it to finish it quickly,” he added.

Barmer refinery

Talking about the HPCL’s Barmer refinery-cum-petrochemical complex, work for which will start on January 16 in the presence of PM Narendra Modi, Pradhan said Rajasthan is expected to save nearly Rs 40,000 crore from the VGF. “The internal rate of return from the project earlier was estimated at was at 6% with a VGF of Rs 3,736 crore per year from the state for 15 years. The project is now set to have an internal rate of return of 12% with just Rs 1,123 crore per year of VGF,” he said.

The Barmer refinery will be India’s first greenfield Bharat Stage VI refinery and production is expected start by 2022-2023. The project has a total capacity of 9 MT. While 2.5 MT of crude will be sourced from the Barmer fields which account for 25% of the country’s reserves, the remaining 6.5 MT — domestic as well as imported crude oil — will be supplied through a pipeline at a cost of Rs 2,500 crore from the west coast in Gujarat. All the statutory clearances, tenders and land acquisition are in place for the project.

The minister was responding to criticism from the Indian National Congress that has raised questions over Modi’s re-laying the foundation stone of the Barmer project which was earlier done in 2013 by then-Congress president Sonia Gandhi. Pradhan claimed that neither there was any plan at that point in time and no approvals were taken, nor any applications were made.

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