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The state industry department has asked the Odisha Industrial Infrastructure Development Corporation (Idco) to formulate the draft memorandum of understanding (MoU) to be signed with Indian Oil Corporation Ltd (IOCL) after due consultation with district government pleader to avoid litigations.
The Petroleum and Natural Gas Regulatory Board (PNGRB), the upstream regulator for the petroleum sector, had already identified nine locations in the state such as Bhubaneswar, Khurda, Rourkela, Bhadrak, Jajpur, Anandpur, Baripada, Balasore and Kamakhyanagar for development of the city gas distribution network (CGD).
The CGD network would involve the distribution of compressed natural gas (CNG) and LNG for domestic and industrial use through pipelines.
The state government is taking enough care to avoid controversies for the project as two iron ore slurry pipeline projects of Essar Steel and Brahmani River Pellet Ltd, a subsidiary of UK-based Stemcor, are still locked in legal tangles.
Sources said, the draft MoU would mandate both entities to explore possible co-operation in the areas of total energy solutions, especially natural gas.
IOCL has plans to set up a five million tonne per annum LNG terminal at Dhamara. It has already entered into a MoU with Dhamara Port Company Ltd (DPCL) for the project.
The distribution is expected to be done through two proposed pipelines - the 1,100-km Kakinada-Haldia pipeline of Reliance Industries Limited, which will have a network of 434 km in Odisha and the 1,700-km Surat-Paradip pipeline, which would have a length of 400 km in the state.
Both the Kakinada-Haldia pipeline and the Surat-Paradip pipeline are set to be completed by 2014. The combined cost of developing the two pipelines is around Rs 17,000 crore.
