Gas projects delay could cost thousands of crores rupees to Kerala community
By Dr MP Sukumaran Nair
Petronet LNG’s Cochin LNG project built at an investment of Rs4500 crore though commissioned and became operational in 2013, capacity utilization remained abysmally low even now for want of pipeline infrastructure for gas transmission, and the company has been incurring heavy losses for the past few years.
The Kerala chief minister during a recent press briefing said the work on these projects are being expedited and will be commissioned within one or two months.
The Cochin LNG project, though envisaged and initial activities had started in 1999, was delayed over a decade compared with the similar Gujarat’s Dehej project, which was successfully commissioned in 2003 and has undergone a seven-fold (from 2.5 to 17.5 MMTPA) capacity expansion during this period.
Besides time and cost overrun of the Cochin LNG project and the Gail pipelines for over 17 years (remember the ‘legendary’ Kallada Irrigation Project of the State Irrigation Dept), the economic loss to the Kerala community during the period on a fair assumptions runs into over Rs1 lakh crore.
The lost opportunity can well be attributed to the high price the public has been paying all these years for LPG for their household fuel instead of City Gas, the fertiliser producers paying to procure naphtha in place of gas, huge price the people and entities paying for petrol/diesel instead of auto gas, use of costly liquid fuel (naphtha or fuel oil) for power generation at BSES and NTPC thermal power plants, and using alternate high cost fuels in place of gas by the small and medium sector, commercial establishments etc.
The loss of revenue to the state by way of taxes on account of the delay in gas sales is also substantial. The Kerala CM needs to be complimented for achieving the completion of the pipelines in the state despite several odds. Ever since the Government came to power in 2016, the CM viewed the gas pipeline project as one of the most crucial projects among several other infrastructure projects taken up in the state for its future growth.
There were many hurdles that posed challenges to this project. Issues right from public protest that risked the safety of people, natural calamities including floods, contractor delays, clearance-related issues from Government departments, to lethargic project management, and even the Covid 19 lockdown for certain delayed the project completion for well over two years.
As the trunk line carrying regasefied LNG begins from the Cochin terminal, most industry majors along the route are able to draw gas directly to their facilities making the supply easier and cost-effective.
Once commissioned, the Mangaluru based industrial units, especially the ammonia and urea plants of Mangalore Chemical & Fertilizers Ltd (MCF), other heavy, medium and small scale industries and commercial units like hotels and other firms along Kochi-Mangaluru pipeline route will stand to gain in a big way by way of access to low cost, low-emission and safer natural gas.
The public will be able to access gas only after the completion of the proposed City Gas Distribution (CGD) projects. The CGD project has been envisaged to distribute natural gas to households to ensure year-long, seamless supply of cooking gas. Under the project, Piped Natural Gas (PNG) will be supplied to households and Compressed Natural Gas (CNG) to automobiles.
As on date, auto gas is cheaper by 35 per cent to petrol, 33 per cent to diesel, whereas CNG is cheaper by 20 per cent compared with LPG (non-subsidy).
Major global consultants forecast a ready availability and attractive price trend for natural gas and LNG in the near to medium term.
State-wide use of gas will further push the sustainability development index (SDI) of Kerala from the present score of 0.778 (globally 13th rank). The SDI is a parametric assessment designed to reflect ecological efficiency of human development, which besides other criteria, include CO2 emissions and per-capita material footprint as inputs. Cuba tops the SDI list and India is ranked 56th on a list of 164 nations.
IOC Adani Gas Pvt Ltd (IAGPL) has been awarded the City Gas distribution for Ernakulam district by Petroleum and Natural Gas Regulatory Board (PNGRB) in its fourth bidding round in 2015 and for all northern districts (Kasaragode, Kannur, Kozhikode, Wyanad, Malappuram, and Palakkad & Thrissur) through CGD authorization in the ninth bidding round in 2018.
Despite the proactive stand taken by the state government with the Chief Minister nominating the Chief Secretary of the state as the nodal officer for the project in June 2018, the targeted CGD coverage in the state is still a far cry.
During the last two years, IAGPL could complete only a few gas stations and household connections in Ernakulam district. With only a year left for the present government to complete its five-year term, the work on the CGD projects in the state needs to be expedited for the benefit of the state and its people.
(The author is formerly Special Secretary to Chief Minister & former Chairman, Public Sector Restructuring & Internal Audit Board (RIAB), Government t of Kerala)