Infrastructure development has often faced obstacles in Kerala and the State’s aversion to big-ticket infrastructure development has been the subject of much chatter, especially outside the State. But winds of change might just be sweeping somewhat imperceptibly across Kerala with major infra projects gathering pace and getting completed in record time. The Kochi Metro Rail project was a recent example. The next could well be the Kochi-Mangaluru natural gas pipeline, one of the State’s dream projects.
Many have known about this ambitious project only in terms of the resistance to the pipeline by local communities, worried about its safety and possible loss of their precious landholdings. The resistance, led by civil society formations and persons worried about the impact the project would have on the livelihood and meagre habitation facilities of the local communities, has more or less died down with the State government assuring them appropriate compensation and Gail (India) Ltd., the Central public sector enterprise that has taken up the project, reassuring them about their safety. Thanks to the local communities’ acceptance of the terms of compensation put forward by the government and Gail (India), a new era in the State’s energy sector looks all set to dawn.
Being laid at an estimated project outlay of ₹3,263 crore with end-2018 as deadline, the project has gathered momentum with the government completing land acquisition for the entire stretch of the pipeline within the State and Gail (India) awarding contract for construction of the full stretch of the Kochi-Mangaluru route, extending 438 km, in seven ‘reaches’. A stretch of over 40 km in Kochi has already been brought under pipeline connectivity and Regasified Liquefied Natural Gas (RLNG) is being supplied to industrial units such as FACT and BPCL. Currently, around 3 mmscmd (Million Metric Standard Cubic Meter a Day) of gas is being supplied to various consumers in and around Kochi city.
The pipeline work in Thrissur and Palakkad districts was initiated a few months ago. Contracts for pipeline laying works of the remaining 111 km stretch, falling in Malappuram, Kannur and Kasaragod districts, were awarded at an approximate combined cost of ₹160 crore recently. “With the latest award of contracts a few weeks ago, the entire stretch of the 438-km Kochi-Koottanad-Mangaluru pipeline is now fully in the construction phase. The work has got slowed down owing to the rains, but the entire project is expected to be over by September next year. The project could be commissioned by December 2018,” Tony Mathew, head of the project, told The Hindu .
Government support
Gail (India) has succeeded fast-tracking the project thanks to the determination of the State government to see it reach fruition. The firm stand taken by the government, particularly Chief Minister Pinarayi Vijayan, on land acquisition has played a big part in this. Land is being acquired for the project under the Petroleum and Mineral Pipelines (Acquisition of Rights of User in Land) Act, 1962. Under the Act, the owner will retain ownership of the land on which cultivation other than planting of trees is permitted. Gail (India) had earlier incurred a loss of over ₹200 crore due to delay in executing the pipeline work, which was approved in 2010 and begun in 2012. Contractors had abandoned work in several segments earlier due to stiff opposition from the local communities.
Completion of the natural gas pipeline will open up new possibilities for piped natural gas (PNG) distribution along the Kochi-Mangaluru route. Thrissur, Kozhikode and other places can hope to get domestic piped gas supply under the City Gas project. Petroleum & Natural Gas Regulatory Board (PNGRB) is expected to float tenders to execute the City Gas projects in different cities as and when the gas pipeline network gets ready. The City Gas scheme is already under implementation in Ernakulam now. “The State government gets ₹80 lakh a day by way of taxes in the present gas distribution business. The tax revenue could go up tremendously when the entire project is commissioned,” the Gail official said.
The Kochi-Koottanad-Mangaluru-Bengaluru pipeline project is being taken up in two directions from Koottanad, one going to Mangaluru and the other to Bengaluru. The pipe-laying towards Bengaluru, through Tamil Nadu and Karnataka, will be taken up in consultation with the respective State governments. Talks are under way with the Tamil Nadu government. Kerala could be connected to the national gas grid once the pipeline network reaches Bengaluru. The connectivity to Bengaluru would also provide a big opportunity to all the three southern States to get a share of the subsidised quota of natural gas from the national grid. The completion of the pipeline project to Mangaluru in the current phase would also lead to a much needed increase in capacity utilisation of LNG at the Petronet LNG terminal at Puthuvype in Kochi. The terminal, commissioned three years ago, had been adversely affected by the delay in the execution of the pipeline project, primarily aimed at supply of gas to bulk consumers in Kerala, Tamil Nadu and Karnataka.
The 5 mmtpa terminal had been functioning at less than 10% capacity utilisation initially. The company has been adopting strategies such as part-leasing of the terminal to reduce its operating losses. The capacity utilisation has gone up thanks to regular supply to FACT and BPCL, but still it remains less than 20%. Petronet is also hoping to supply natural gas to NTPC Kayamkulam where the power plant has been modified to make use of natural gas. NTPC had been generating power by using naphtha, but the production cost had gone up owing to the high cost of the feedstock. The public sector company is ready to make electricity by using RLNG, but the KSEB has not signed power purchase agreement with it.
NTPC’s prospects
Natural gas has been exempted from the purview of the newly introduced GST regime. The application of GST could bring down the rate of taxation and might benefit the industry. In such a case, supply of gas at cheaper rates to NTPC could be a possibility. It could bring a considerable change in the power production scenario as well as capacity utilisation at the Petronet terminal at Kochi. The government is understood to be keen on making use of LNG for power generation as well as in the transport industry. An undersea pipeline project to carry gas to Kayamkulam had received environmental clearance but had not been taken up owing to opposition from fishers’ organisations.
If the government succeeds in allaying the fears of the fishers and the undersea pipeline gets executed, the gas-based industry could hope to get a boost in southern parts of Kerala. Bulk consumers in Kollam and Thiruvananthapuram are interested in buying LNG. This apart, the Kerala State Road Transport Corporation also has plans to run buses on LNG. The corporation is in the process of making infrastructure for LNG stations at various locations. It could be a win-win situation for the petroleum industry and the State if the network spreads southward, say experts in the petroleum industry.
