Dabhol-Bangalore Pipeline Project Ahead of Schedule, but Problems Loom

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Researched by Industrial Info Resources (Sugar Land, Texas)--Phase I construction of GAIL (India) Limited's (BSE:532155) (New Delhi) Dabhol-Bangalore pipeline is progressing ahead of schedule, according to the latest status update from the company, but problems regarding land acquisition continue. The company has said that as of April 2011, 54.9% of physical progress has been achieved against the scheduled target of 46.8%. Phase I of the project is scheduled to be completed by March 2012, but may be rescheduled to synchronize with the capacity augmentation of the Dabhol LNG terminal, which will be the source of gas for the pipeline.

Phase I of the project, which entails laying 996 kilometers of pipeline at a capital expenditure of $1 billion has been mired in delays due to land acquisition problems. Although progress has been made, right of use needs to be acquired for most of the land.

Land acquisition problems in Goa are causing delays. Another cause of concern is the completion of the expansion of the Dabhol LNG terminal, which will be the primary source of gas for the pipeline. The terminal will not be ready before 2013-14, but intermittent LNG cargoes are expected to be received after dredging work is completed.

The project is being implemented in two phases. Under Phase I, a trunkline will be laid between Dabhol and Bangalore, along with a few spurlines. In Phase II, only spurlines will be laid to Bellary, Ratnagiri, Kolahpur and Devengere. Phase II is expected to be completed in December 2012. The approved investment for Phase I is $1 billion, of which $500 million has already been spent.

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