In only the second instance of the government directly funding a gas pipeline, the Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved a Rs 5,559 crore viability gap funding for the proposed North-East gas grid, Oil Minister Dharmendra Pradhan said.
The 1,656-km North-East Natural Gas Pipeline Grid will connect Guwahati in Assam to major cities in the region such as Itanagar, Dimapur, Kohima, Imphal, Aizwal, Agartala, Shillong, Silchar, Gangtok, and Numaligarh. The pipeline will enable the supply of piped cooking gas to households and CNG to automobiles, besides fuel to industry.
However, in the absence of anchor customers, the Rs 9,265 crore pipeline is not economically viable.
The CCEA headed by Prime Minister Narendra Modi approved "a viability gap funding of 60 per cent of the project cost," Pradhan said at a post-Cabinet press briefing here.
The North-East pipeline grid is to be implemented by Indradhanush Gas Grid, a joint venture of state-owned GAIL India, Indian Oil Corp (IOC), Oil and Natural Gas Corp (ONGC), Oil India Ltd (OIL) and Numaligarh Refinery Ltd (NRL).
The consortium had pitched for a 60 per cent funding support from the government and would raise the rest via equity and debt. Without government support, the pipeline will not be viable.
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This is the second time that a gas pipeline project in the country will be funded by the government.
In 2016, the government provided a capital grant of Rs 5,176 crore, or 40 per cent of the project cost of the 2,655-km Jagdishpur-Haldia and Bokaro-Dhamra (JHBDPL) gas pipeline project, which GAIL is currently executing.
GAIL is also laying a 750-km line from Barauni to Guwahati as part of the Rs 12,940 crore JHBDPL project, which is also known as the Pradhan Mantri Urja Ganga' project. This is proposed to be connected to the North-East via the Indradhanush grid.
All other pipelines in the country have been funded by public or private sector companies.
Pradhan said the project is critical towards implementing the government's Hydrocarbon Vision 2030 for the North-East.
The vision envisages the development of the region by leveraging its hydrocarbon potential, enhancing access to clean fuel and accelerating the growth.
"About 20 per cent of India's natural gas production comes from the North-East. Out of about 75 million standard cubic meters per day of gas output, 15 mmscmd come from North East," Pradhan said. "Currently Assam, Arunachal Pradesh and Tripura have established gas production potential while there are possibilities for the same in Nagaland and Manipur."
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