After taking a tough stand on cost recovery by the Mukesh Ambani-led Reliance Industries Ltd (RIL), the government is cracking the whip on another company promoted by him, Reliance Gas Transportation Infrastructure Ltd (RGTIL), for delay in building gas pipelines.
The company has authorisation for building four trunk pipelines — Kakinada-Haldia, Kakinada-Chennai, Chennai-Tuticorin and Chennai-Bangalore-Mangalore — which were scheduled to be completed this year.
In a stock-taking meeting held last week, the petroleum ministry asked RGTIL to take steps to complete the pipelines immediately, or face “stringent action”. The ministry also asked the company to renew its bank guarantees for the four pipelines.
During the meeting, RGTIL maintained it was in a position to complete the pipelines in two years, but wanted to synchronise construction with gas sourcing.
RGTIL operates a 1,400-km gas pipeline network in the country. Of the nine authorisations granted by the government for around 5,523-km of pipelines in 2007, RGTIL won four, spanning 2,175 km. The remaining five pipelines covering a distance of 3,348 km are with GAIL India Ltd. The government-owned company has started work on four pipelines.
The two companies were required to complete the pipelines within 36 months of the notification of expression of interest or 24 months from the date of 100 per cent availability of right of user (RoU), whichever is later. RGTIL has RoU and environmental clearances for all four authorised pipelines, but it wants to rework the pipeline sizing for optimisation of capacity. An RIL spokesperson did not respond to email queries.
One of the reasons that RGTIL has not started construction on the pipelines is that gas production from RIL’s KG-D6 field has fallen to around 32 million standard cubic metre a day, less than 50 per cent of its projected production.
The petroleum ministry on May 2 had struck down RIL’s plan to recover $1.2 billion in costs before the company started sharing profits with the government from its gas field off the Andhra coast.
The ministry disallowed the costs recovery from the KG D6 gas field because of RIL’s failure to meet drilling commitments and blamed the company for violating production sharing contract obligations.
