NoC for Adani's Lucknow gas pipeline suspended

The Uttar Pradesh government has suspended the No Objection Certificate given to the Adani Energy consortium for laying the gas pipeline for domestic, industrial consumers and vehicles in Lucknow. The NoC has been suspended for two months and is likely to be cancelled.

The state government on July 19 has withdrawn the restriction imposed on the Green Gas Limited from laying gas pipeline in Lucknow and Kanpur. The previous Mulayam Singh Yadav government had announced the "UP Gas Use and Distribution Policy" in August 2005, under which expressions of interest were invited in October 2005.

The Gas authority Of India (GAIL) had set up a JV with the Indian Oil Corporation, Green Gas Ltd (GGL), for supplying LPG and CNG in Lucknow and Agra.

The GGL was already working on the project for laying the pipelines in Lucknow and had completed the mother gas station near the Amausi airport on Lucknow-Kanpur national highway in May 2004.

The GGL had planned to lay 22 long gas pipelines in Lucknow for domestic and industrial consumers, besides supplying to the vehicles.

The GGL refused to participate in expressions of interest invited by the UP government. Soon after the announcement of the gas policy, the contract for gas supply in Lucknow was awarded to Adani Energy consortium and NoC was issued to it in February 2, 2006, by the state government's nodal agency UP State Industrial Development Corporation (UPSIDC).

Soon after, the UPSIDC instructed the GGL to stop the work forthwith in Lucknow. The UPSIDC, under the gas policy, was appointed by the state government to act as single window agency for obtaining approvals and clearances from different government agencies for gas pipeline projects.

According to the conditions of the NoC, the Adani Energy was required to submit proof of the gas supply within three months of the issue of NoC. The Adani failed to furnish the proof even after 16 months.

The Adani were also required to furnish the source of the gas and the means of transport to Lucknow. So far only GAIL has the network of pipelines at different location of the country for the transportation of gas.

The Adani, as per the conditions of the NoC, were required to operationalise four CNG stations within one year of the issue of NoC. The Adani failed to meet all these conditions.

The previous Mulayam Singh government's action to change the horse at the midstream caused huge losses to the GGL besides delaying the pipeline project by several years. The original cost of laying 1.5 metre deep gas pipeline project in Lucknow was Rs 50 crore while the GGL has already invested Rs 57 crore in Lucknow.

GAIL had completed the laying of gas pipeline for connecting Lucknow with the GAIL's main pipeline, HBJ pipeline, in August 2004. The CNG mother gas station was also constructed shortly afterwards. The GGL was prevented from constructing two daughter gas stations in Lucknow.

In the absence of two daughter stations, the GGL transported the gas in cylinders to the two stations, reconverted it into CNG and supplied to over two thousand auto rickshaws and two hundred buses deployed in public transport in state capital. The first phase of the GGL project was to be completed by March 2006.

In the first phase of the project in Lucknow, seven CNG stations are to be constructed. The GAIL led JV, will cater to four segments of consumers "" transport, domestic, commercial establishments like hotels and office buildings and industries. Except the transport and hotels, other segments of consumers would be covered under second phase of the project.

The 22-km long pipeline in the first phase is proposed to be extended to 55 km when the Green Gas Ltd will construct the gas grid for catering to the needs of the domestic consumers.

The second phase of the project would take another three years to complete. Total cost of the CNG project in Lucknow is Rs 450 crore. For the supply of LPG and CNG in Kanpur, GAIL has already set up a JV, UP Gas Ltd, with the BPCL for laying the pipeline and gas supply at Kanpur.