Govt to rope in public sector oil companies for gas pipeline project

To invite expressions of interest soon

The Andhra Pradesh government is planning to rope in public sector oil companies among others to jointly implement the common gas pipeline network project, proposed to be taken up under public-private partnership.

"Oil and Natural Gas Corporation (ONGC) has already expressed its willingness to join this endeavour. The government will soon invite expressions of interest from others as well," K Rosaiah, state finance minister told Business Standard here on Thursday.

ONGC has its presence in the K-G Basin since a long time and is currently pursuing its quest for new petroleum and natural gas reserves through deep sea exploration operations along with Reliance and Cairn Energy.

According to the minister, though the government has been contemplating various ways to ensure utilisation of the additional gas resources that are expected to be available from 2008 for the economic development of the state, it took some time to zero in on the idea of taking up the basic infrastructure under public-private format.

"The concept was successfully implemented in Gujarat. We want to follow a similar model. Though there is a feeling that we should have acted long back on the project, we are hopeful of getting the project in place coinciding with the commencement of production of Reliance gas in 2008," the minister observed.

As of now, the production of gas in the K-G Basin has been less than 10 MCMD. Reliance had announced that it will start producing more than 40 MCMD of natural gas from its gas wells in K- G Basin from 2007-08.

"Unless the government creates the pipeline network by 2008, it will not be in a position to ask the companies to supply gas within the state. And unless the government participates in the project, it will not be in a position to monitor the supply side either," Rosaiah said while clarifying on the intention behind the government's latest move.

Brushing aside the doubts being raised from certain quarters in the government on the workability of the idea, the minister said that every company will be compelled to utilise the common pipeline network in the state.

"We will bring necessary legislation to make the common infrastructure facility mandatory," Rosaiah said, adding that Reliance too is welcome to join this public-private joint venture.

With regard to the funds required to implement a big project like this, the minister said that several multinational companies are ready to lend both money and technology for the project.

Regarding permissions supposedly being given to Reliance for laying its own pipeline, the minister said, "As of now they are all only on paper. So, nothing is going to come in the way of our common infrastructure facility."

The government recently took a 5 per cent stake in Bhagyanagar Gas Ltd, a joint venture company between Gas Authority of India Ltd and Hindustan Petroleum Corporation Ltd, which has firmed up plans to execute a Rs 260-crore project for setting up CNG stations and piped gas supply networks in Hyderabad and Vijayawada.

Besides the pipeline project, ONGC is planning to take up other ventures in Andhra Pradesh, especially at the port town of Kakinada, which is the landfall of K-G Basin.

It has agreed to develop a special economic zone in alliance with Kakinada Seaports Limited near Kakinada and is also planning to set up an oil refinery there.