The Hindu Business Line : Reliance seeks to share HPCL's Delhi-Mundhra pipeline

RELIANCE Industries Ltd (RIL) has sought to book pipeline capacity in Hindustan Petroleum Corporation Ltd's proposed Delhi-Mundhra petro-product pipeline. RIL has proposed reservation of 0.5 million tonne capacity in the first year, going up to 1.5 million tonne in the fourth year of operation, according to industry sources.

RIL has said that it would inject petro-products at Palanpur in Rajasthan, which is roughly 340 kilometres from Mundhra, Gujarat. To move its products to Palanpur, RIL proposes to set up a pipeline between Jamnagar, where its 31 million tonne refinery is situated, and Palanpur, the injection point.

HPCL hopes to complete its proposed 1,008-km Mundhra-Delhi product pipeline within the next three years.

In line with the pipeline policy set out by the Central Government, the company recently offered 25 per cent of the pipeline capacity on a `common carrier' basis; Expression of Interests (EoIs) were called on December 1, 2003, by the Ministry of Petroleum and Natural Gas.

It is under this provision that Reliance has sought to reserve capacity in the pipeline for transporting its products.

Importantly, Reliance's capacity requirement is marginally above the 25 per cent reservation mandated by the Government. The Rs 1,367-crore pipeline has a capacity of 5.8 million tonne per annum. Of this, around 4.7 million tonne per annum capacity will be dedicated for use by HPCL. The rest 1.1 million tonnes corresponds to the 25 per cent spare capacity, which is less than the 1.5 million capacity sought by Reliance.

According to industry sources, this could mean revision of project parameters by HPCL. The Government, in its current role as the quasi-regulator in the pipeline business, is yet to take a view on this issue.

The Mundhra-Delhi pipeline will begin at Mundhra in Gujarat, where HPCL is setting up an import terminal for crude and petroleum products. However, the origin point could be revised depending on the users' requirements.

The pipeline will mainly carry light oils such as diesel, petrol and kerosene. It will not only transport products imported at Mundhra but also carry products from HPCL's Trombay refinery.

The project is scheduled for completion within 30 months from `zero date' once it obtains the necessary Union Government approvals.

HPCL plans to fund the project on a 1:1 debt-equity ratio, but finally, financing will be worked out according to the interest expressed by other companies.