National highway for gas in pipeline

Funds for developing grid may be raised through cess on domestically-produced natural gas

THE government may develop a national gas highway network to ensure supply of natural gas across the country, a senior official in the oil ministry said.
    As infrastructure firms are not interested in venturing into non-profitable regions, the ministry may develop the national gas highway, said petroleum secretary RS Pandey.
    There is a nationwide demand for natural gas, but it can be supplied only through pipelines. Gas pipelines are concentrated mainly in the eastern and western regions while the southern, central and north-eastern regions lack infrastructure.
    Mr Pandey said funds for developing the national gas highway could be raised through various means, including a cess on domestically-produced natural gas. It is estimated that a cess of 20 cent per mmBtu may generate Rs 3,000 crore annually.
    "But it (cess) is only one of the several funding options," he said on the sidelines of an industry meeting organised by the India Energy Forum.
    State-owned gas transportation major GAIL India's estimates that Rs 5-6 crore is required to lay 1 km of pipeline. With Rs 3,000 crore, the government can build 500-600 km of gas pipelines every year.
    Mr Pandey said natural gas will fuel the country's economic growth, and pipeline infrastructure across the country is a must for balanced regional growth.
    "Industries develop along natural gas pipelines. Hazira-Vijaipur-Jagdishpur (HVJ) pipeline is one such example," he said. Most of the domestic as well as imported gas is consumed in Gujarat and along the HVJ pipeline.
    At the forum, Mr Pandey said the three government-owned oil companies—Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp—are still losing money by selling fuels below cost. Their revenue loss on fuel sales in 2009-10 could be around Rs 15,000 crore compared to Rs 103,292 crore in 2008-09.
    The three are currently losing money on retail sale of petrol, cooking gas and kerosene sold through fair-price shops. But they are making a profit on diesel. Their loss on petrol is about Rs 1.50 a litre, kerosene Rs 12.27 a litre and cooking gas Rs 91.51 a cylinder. On diesel, they are making a profit of Rs 1.09 per litre.

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