'Right-of-User' Hurdle Delays GAIL's Pipeline Project

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Researched by Industrial Info Resources India (Delhi, India)-- Indian state-owned gas major GAIL India Limited's (BSE:532155) (GAIL) (New Delhi, India) Kochi-Koottanad-Bangalore/Mangalore pipeline project is facing a major setback as the company struggles to acquire "Right-of-User" for the land needed for laying pipelines.

The landowners in the Mangalore and Dakshina Kannada districts of Karnataka have been staging protests against the $460 million project, demanding higher compensation for their land.

Due to this logjam, the project, which was earlier running ahead of schedule, is now lagging five months behind. According to GAIL sources, the problem of land acquisition is faced mainly in the states of Tamil Nadu, Karnataka and Kerala, as the farmers are not satisfied with the compensation package offered by the company. Thus, the completion schedule of the project has been revised from December 2012 to April 2013.

The pipeline, which has a design capacity of 16 million standard cubic meters per day, has been laid between Alwaye and Mangalore, as well as between Palghat and Bangalore in southern India. The project is being implemented in two phases. The first phase involved the laying of pipeline between Kochi and Alwaye with spurlines, and was completed in April 2012.

Strong protests from the villagers and the landowners have been witnessed in the Dakshin Kannada district of Karnataka. As a consequence, the gas major had to look for an alternate route along the coastline, but that also is not turning out to be easy because of the protests from those who are going to be hit by the re-routing. Further, farmers in Coimbatore and Trippur districts of Tamil Nadu are also now up in arms against the project; this may again affect completion of the second phase of the pipeline project.

For the execution of current phase of the 860-kilometer pipeline project, the company has engaged Mecon Limited (Ranchi, Jarkhand) as the engineering and procurement contractor and Corrtech International Private Limited (Ahmedabad, Gujarat) as the construction contractor.

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