Piped gas distribution to extend to 28 cities

The city gas distribution system in India would require an investment of Rs 10,000 crore to Rs 12,000 crore through public-private partnerships over the next two years.

A phased roll-out of the system will increase the distribution of piped natural gas (PNG) from Mumbai and New Delhi to 28 cities "" including Kolkata, Chennai, Bangalore and Hyderabad "" identified by GAIL India Limited in the first phase.

The other prominent cities to be covered under the project are Agra, Kanpur, Lucknow, Pune, Ahmedabad, Vijaywada, Navi Mumbai, Allahabad, Indore, Vadodara and the national capital region.

Eight joint ventures have already been formed for this purpose, said Union Minister for Petroleum and Natural Gas, Murli Deora.

"Foreign participation in joint ventures for city gas distribution is as welcome as participation from private operators in India. These companies would be 50:50 JVs and would operate like private companies and not public sector units. GAIL would have 22.5 per cent stake in the companies and respective state governments would have five per cent stake," Deora said.

During later phases, 200 cities would be covered by the city gas distribution network in 15 states. This would mean an increase in pipeline coverage from 6,300 kms to 8,400 kms.

The city gas distribution would develop along the upcoming pipelines joining Dadri-Nangal, Chainsa-Hissar, Vijaipur-Haldia, Kakinada-Haldia, Dabhol-Bangalore and Kochi-Mangalore.

The roll-out of the system will, however, be dependent on the production of natural gas in the country which is expected to increase towards the middle of 2008. An extra 10 million metric standard cubic metre per day of compressed gas for vehicles would be needed by the end of the 11th Plan, according to a presentation by GAIL.

PNG, which is cheaper than liquid petroleum gas by up to 35 per cent in Mumbai, serves three lakh households in the city. This has made 25 lakh LPG cylinders available for circulation elsewhere. By the time it reaches to two crore subscribers, PNG is expected to free up 160 million LPG cylinders in circulation.

"Once these cylinders are free, we can deploy them in rural areas . That is an easier route as people are still sceptical about using PNG, although it is a safer fuel than LPG," said Chairman and Managing Director of GAIL India Limited, UD Choubey.

On the other hand, a total of 10 mmscmd of liquefied natural gas would be needed for industrial consumption by the end of the 11th Plan and the supply of LNG is expected to increase four-fold by that time.

The capacity of LNG terminals would also be increased to 16.25 million metric tonne (mmt) per annum from the existing 7.5 mmt per annum, according to the GAIL presentation.