Uncertainty over Reliance gas pipelines in AP

The fate of two proposed pipelines by Reliance Gas Transportation Infrastructure Ltd hangs in the balance, with the Petroleum and Natural Gas Regulatory Board (PNGRB) seeking a commitment from the firm about the execution of the project.

The central government had in 2007 authorised Reliance Gas – a subsidiary of Mukesh Ambani's Reliance Industries Ltd – to go ahead and lay three trunk pipelines: the 1,395-km-long Kakinada-Bharuch pipeline, the 1,100-km Kakinada-Basudebpur-Howrah line, and the 577 km-long Kakinada-Chennai pipeline. 

All three contracts were awarded before the downstream petroleum sector regulator came into being. Reliance claims the delay in executing two pipelines – from Kakinada to Howrah and Chennai – is because of uncertainties about who the government will allocate the gas from its KG-D6 block fields. Also, because of a shortfall in production at the KG-D6 block fields, it could execute only the Kakinada-Gujarat pipeline.

The PNGRB has asked Reliance to respond within a fortnight as to why its licence should not be cancelled for failure to start laying the pipelines on two routes – Kakinada-Vizianagaram-Srikakulam  (part of the route to Howrah) and Kakinada-Ennore-Nellore-Chennai. Reliance is supposed to complete construction of the two trunk lines within Andhra Pradesh by June next year.

This was decided at an open house in Delhi on Wednesday, when the Andhra Pradesh Gas Infrastructure Co Ltd (APGIC), a joint venture between two Andhra government units, filed a complaint against Reliance.

The regulator is now expected to put the AP pipeline proposals through a bidding process, which would mean Reliance could lose the authorisation for the two pipelines and may have to bid for them again. Three companies – Reliance, APGIC and central undertaking Gas Authority of India Ltd (GAIL) – are involved in a bitter row over the rights to lay these pipelines.