PNGRB for open access ATF pipelines to cut fuel costs, boost competition

Oil regulator PNGRB has proposed supplying jet fuel or ATF in all existing and future airports through pipelines that can be accessed by any supplier so as to bring in competition and cut fuel cost.

Currently, ATF is transported by road and rail network and only a limited number of airports are linked with pipelines. Even where pipelines are there, they are not on an open access basis which means only the company that has laid it can supply jet fuel to airlines.

The Petroleum and Natural Gas Regulatory Board (PNGRB) has invited comments from the public and various stakeholders including oil marketing companies (OMCs), airport operators, and airlines operators for development of aviation turbine fuel (ATF) pipelines connecting various greenfield and brownfield existing and upcoming airports in India.

"Pipelines are the cheapest mode of transport of liquid fuels with road transport being quite costly. And looking at the high share of ATF price in airline costs, provision of the pipeline could bring down the cost of air travel," the regulator said in a notice inviting comments.

While the fuel market is open in the airport premises, in the absence of a common carrier pipeline the objective of this open market cannot be achieved.

"There are a few other ATF pipelines which are being operated by the OMCs, which also need to be declared as common/contract carriers," the regulator said. "This move will enable other OMCs to utilize these pipelines for transporting their products, fostering competitiveness within the industry".

Further, to ensure security of supply there may be desirability of more than one pipeline supply to major airports. Additionally, existing pipelines need to be declared as common carriers especially due to historical domination of government owned ATF marketing companies so as to allow private marketers get access, it said.

This will cater to rising fuel demand of the aviation sector.

Domestic air passenger traffic rose by compounded annual growth rate of 8.9 per cent between 2012-13 and 2022-23. International passenger traffic grew by a slower 3.1 per cent over the same period. During fiscal year 2022-23 (April 2022 to March 2023), India saw a 47.1 per cent surge in ATF consumption, correlating with heightened air traffic. The previous year was marred by the pandemic that shut businesses.

Transporting ATF by any other means than pipeline, results in logistical inefficiencies, increased expenses, and disruptions in the supply chain, PNGRB said. "The absence of an ATF pipeline exacerbates these issues, hindering the sector's competitiveness and sustainability."

PNGRB said it is seeking comments from stakeholders to gather insights for effective development of ATF pipelines across the aviation infrastructure in the country.

It asked stakeholders to identify key airports requiring ATF pipeline connectivity, assess potential demand over the next 30 years, identify ATF supply source, evaluate potential routes for pipeline construction and assess the need for single or multiple common/contract carrier ATF pipelines to ensure redundancy and operational reliability.

"The views and suggestions received will help PNGRB in initiating suo moto bidding processes or assisting entities in identifying potential projects," the notice said.

In recent times, PNGRB has authorized two new ATF pipelines for connecting upcoming greenfield international airports -- one from IndianOil's JNPT terminal to Navi Mumbai international airport and the second from Bharat Petroleum's Piyala terminal to Noida International Airport, Jewar as common/contract carrier pipeline through bidding process.

In the past, PNGRB has also declared IndianOil's existing Devangonthi to Devanahalli ATF pipeline for connecting Bangalore airport as a common/contract carrier. Another ATF pipeline from Malkapur to Hyderabad Airport is under bidding process.