The government today agreed to partly fund a Rs 13,000 crore natural gas pipeline project that will take the fuel to Prime Minister Narendra Modi's constituency and the eastern part of the country.
The government will provide Rs 5,176 crore or about 40 per cent of the project cost after state-owned gas utility found it difficult to commercially justify the huge investment of Rs 12,940 crore in absence of either a firm source of gas supply or customers.
The 2,539-km long pipeline from Jagdishpur in Uttar Pradesh to Haldia in West Bengal and also Bokaro in Jharkhand and Dhamra in Odisha will be completed by 2020.
"This is the first time in the history that the government has decided to part fund any gas pipeline project," Oil Minister Dharmendra Pradhan said.
GAIL, the nation's largest natural gas transporter, was formed in 1984 and has since then laid about 14,000-km of pipeline network on strength of its balance sheet and without any budgetary support from the government.
Its pipeline brings gas from western offshore fields and fuel imported in Gujarat and Maharashtra right up to Jagdishpur. The new pipeline will take the gas first to Varanasi (which is Prime Minister Narendra Modi's Lok Sabha constituency) and onwards to Bihar, West Bengal, Jharkhand and Odisha.
Also, an LNG import terminal is planned at Dhamra, which could also be a source of supply of gas to the five states.
The new pipeline will carry fuel to four shut fertilizer plants, three refineries at Barauni in Bihar, Haldia in West Bengal and Paradip in Odisha and provide CNG and piped cooking gas in several cities onroute, including Varanasi, Patna, Ranchi, Jamshedpur, Bhubaneswar, Kolkata and Cuttack.
"The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi has approved viability gap funding/partial capital grant at 40 per cent (Rs 5,176 crore) of the estimated capital cost of Rs 12,940 crore to GAIL for development of 2,539 km long Jagdishpur-Haidia and Bokaro- Dhamra Gas Pipeline (JHBDPL) project," he said.
The Centre has taken this 'historic decision' to provide capital support for developing this gas pipeline, an official statement said.
The project will connect eastern part of the country with National Gas Grid.
This grant will encourage supply of eco-friendly fuel at affordable tariffs to industries and will encourage industrial development in these states, the release said.
CCEA has also approved the simultaneous development of City Gas Distribution (CGD) networks in cities including Varanasi, Patna, Ranchi, Jamshedpur, Bhubaneswar, Kolkata, Cuttack en-route of the JHBDPL project.
These distribution networks will be developed by GAIL in collaboration with the concerned states.
It will bring clean cooking fuel at the doorstep of domestic households as well as provide clean fuel to transport sector in the eastern region.
About 1.25 crore population living in these cities will be directly benefited by the establishment of these CGD networks.
All these projects will generate direct as well as indirect employment for about 21,000 people and will boost socio-economic development in the eastern part of the country.
The Cabinet earlier had approved the revival of three fertiliser units (FCIL-Gorakhpur, HFCL-Barauni and FCIL- Sindri) along the route of this pipeline project.
On revival, these units will be the anchor gas customers for JHBDPL project and gas to these plants will be supplied under the Gas Pooling Scheme for urea sector at pooled price, it added.
Disclaimer: No Business Standard Journalist was involved in creation of this content
