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Mukesh's firm loses rights for laying gas pipelines

Last updated on: October 11, 2012 09:49 IST

Mukesh's firm loses rights for laying gas pipelines

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Jyoti Mukul in New Delhi

Ending months of uncertainty, the government has cancelled authorisations issued to Mukesh Ambani's privately held firm to lay down four gas pipelines totaling 2,175 km.

The company, Reliance Gas Transportation Infrastructure Ltd or RGTIL, had authorisation for building four trunk pipelines -- Kakinada-Haldia, Kakinada-Chennai, Chennai-Tuticorin and Chennai-Bengaluru-Mangalore -- which were scheduled to be completed this year.

Confirming this, a petroleum ministry official said the formal cancellation order has been issued earlier this month.

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Image: Mukesh Ambani.
Photographs: Reuters

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Downstream oil sector regulator Petroleum and Natural Gas Regulatory Board had been pushing for cancellation of the authorization given to RGTIL.

Relogistics Infrastructure Ltd, a subsidiary of RGTIL, had in 2007-08 won the mandate to build these pipelines.

However, it did not make much progress in its pipeline construction citing non-availability of gas.

RGTIL has been maintaining that it is in a position to complete the pipelines in two years, but wanted to synchronise construction with gas sourcing.

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KG-D6 and other eastern offshore gas fields were supposed to be the source of fuel for the pipelines but in view of falling output and no other field coming on stream in near future it does not make economic sense to construct the pipeline, RGTIL had told the ministry in a review meeting held in May.

RGTIL operates a 1,400-km gas pipeline network in the country.

Of the nine authorisations granted by the government for around 5,523-km of pipelines in 2007, Relog won four, spanning 2,175 km.

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Photographs: Rediff Archives
Tags: RGTIL , KG-D6 , Relog

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The remaining five pipelines covering a distance of 3,348 km are with GAIL India Ltd. The government-owned company has started work on four pipelines.

The two companies were required to complete the pipelines within 36 months of the notification of expression of interest or 24 months from the date of 100 per cent availability of right of user, whichever is later.

RGTIL had RoU and environmental clearances for all four authorised pipelines, but it wanted to rework the pipeline sizing for optimisation of capacity.

However, the ministry did not agree to it.

The 36 month period expires in October.

The government has been taking a tough stand on projects of Mukesh Ambani controlled companies.

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Photographs: Reuters

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Petroleum minister Jaipal Reddy on Tuesday said his ministry was not convinced f the geological reasons cited by Reliance Industries Ltd, country's biggest private sector petroleum company, to justify the declining output from the KG D6 gas field.

The petroleum ministry on May 2 struck down RIL's plan to recover $1.2 billion in costs before the company started sharing profits with the government from its gas field off the Andhra coast.

The ministry disallowed the costs recovery from the KG D6 gas field because of RIL's failure to meet drilling commitments and blamed the company for violating production sharing contract obligations.



Image: Petroleum Minister S Jaipal Reddy.
Photographs: Reuters

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