GAIL to participate in gas grid project

Grid proposed to be developed by 2008

GAIL India Limited would take part in the state gas grid project proposed to be set up by the Andhra Pradesh government in association with both the public and private sector oil companies.

This is the first ever commitment by any company to take part in the grand proposal, which was recently mooted by the state government.

Chief minister Y S Rajasekhara Reddy, who returned from New Delhi today, said that the Union petroleum secretary offered GAIL's participation in the proposed gas grid that would be developed by the joint venture "� Andhra Pradesh Gas Grid Corporation.

The state is also in talks with Reliance and the Gujarat State Petroleum Corporation (GSPC), the chief minister said.

According to Reddy, the trunk line to evacuate and distribute power would be laid across the state to provide both industrial and domestic gas supply connections to the consumers.

The grid is proposed to be developed by 2008. Initial estimates say that every 200 km trunk line would require about Rs 500 crore capital investment. GAIL's offer to join this endeavour is a shot in the arm for the state government for the public sector gas utility had its own plans to develop a gas pipeline network in the state.

This apart, the chief minister made a strong plea to Prime Minister Manmohan Singh, when he met him in New Delhi, to set up a gas regulator to oversee the gas prices.

According to him, the Prime Minister has positively responded to the suggestion.

The chief minister also urged the Prime Minister during his visit to look into the possibilities of setting up a barge mounted LNG terminal near Kakinada to meet the fuel requirements of the four new gas power projects till the required gas for these projects is made available.

The alternate fuel clause provided in the power purchase agreements (PPAs) allows these independent power producers (IPPs) to use costly fuel like naptha.

"A time bomb is ticking on the government's head which will cost the state Rs 1,200 crore per year in case gas is not made available as promised by GAIL on time. So I have requested the Prime Minister to expedite the additional gas production by ONGC besides making available the LNG, which is a cheaper source of energy next to natural gas," he said.

The chief minister ruled out the suggestion of forming a gas corporation along the lines of GSPC to undertake exploration operations in the K-G Basin in the near future.