Right of Use Hurdle Bogs Down Another Gas Pipeline Project in India

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Researched by Industrial Info Resources (Delhi, India)--Acquisition of a right of use of land seems to be a major bottleneck in the execution of pipeline projects in India. Over the past few years, a slew of vital crude and petroleum-product pipeline projects that were identified for implementation have been stalled due to this chronic issue.

GAIL India Limited's (BSE:532155) (New Delhi) $460 million Phase II of Kochi-Koottanad-Bangalore/Mangalore pipeline (KKBMPL) is one of such beleaguered projects. With only a 65% physical progress attained so far, the project is not likely to meet its latest completion schedule of June 2013. The project already has suffered a delay of almost a year against its original completion schedule.

Reportedly, the problems that GAIL is facing in land acquisition are mainly in the states of Tamil Nadu, Karnataka and Kerala as the farmers are, apparently, dissatisfied with the compensation package offered by the company.

The KKBMPL pipeline, with a design capacity of 16 million standard cubic meters per day, will connect the Kochi liquefied natural gas (LNG) terminal to Mangalore and Bengaluru in Karnataka. The main pipeline will have feeder lines, and the gas supply from these feeder lines is expected to benefit a sizeable number of industrial units and business establishments. The infrastructure will be connected to the new LNG terminal being set up by Petronet LNG Limited (BSE:532522) (New Delhi, India), and from here the natural gas distribution network will begin. The LNG facility is expected to be operational by March 2013.

The project involves the laying of an 860-kilometer pipeline from Aluva to Kanjikode, from where it will extend to Mangalore as well as Palakkad, with feeder lines to Thrissur. It will pass through the three states of Kerala, Karnataka and Tamil Nadu.

GAIL India is the largest state-owned natural gas processing and distribution company in India, with a pipeline network of 11,000 kilometers. Currently, GAIL transmits more than 160 million metric standard cubic meters per day of gas through its pipelines.

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