The Hindu Business Line : GSPL to invest Rs 1,500 cr for next 625 km of pipeline

THE Gujarat State Petronet Ltd (GSPL), having already laid a 375-km long gas pipeline and set to commission another 50 km by August from Hazira to Ahmedabad, has drawn up major plans to add another 625 km over the next 18-24 months.

The expansion project is expected to cost the state gas carrier almost Rs 1,500 crore, even has the company's investment till date in this sector is touching Rs 1,000 crore. The GSPL plans for going into what would be its second phase of activities has been buoyed by the gas that is currently being transported through its pipelines.

Having brought gas to the Ahmedabad city gates on May 17, the company has already started supplying 5 lakh cumd of gas to the Ahmedabad Electricity Company (AEC) whose 100 MW power plant in Vatwa has started generation once again.

The next on line is the Kalol unit of IFFCO. Having already signed a gas transportation agreement for commencing a 3 lakh cumd supply by July, the IFFCO deal is likely to go up to 6.5 lakh cumd in the next few months and even peak up to 1 million cumd by early 2005. Within the city gates, Arvind Mills Ltd is expected to come good for 2.5 lakh cumd by August, just as the Adani Energy Ltd is looking at kicking off its distribution activities in the city roughly around the same time.

GSPL is currently transporting 3.5 million cumd of gas from the Hazira fields of its mother company, Gujarat State Petroleum Corporation, and another 3.5 million cumd from the Lakshmi fields of Cairns Energy, again at Hazira. With GSPL becoming the carrier for 3.05 million cumd of gas from Petronet LNG, the state gas transportation company has touched a daily volume of 10 million cu.m.

The gas currently on tap from Petronet LNG icludes 1.75 million cumd from GAIL, 1 million from IOC and .0.30 million cumd from BPCL.

Significantly, at 10 miilion cumd, GSPL is touching only one-fourth of the rated capacity of its 24-inch trunk route transmission grid, which can carry up to 40 million cumd of gas. But things are looking up for the company as the Royal Dutch Shell's Hazira LNG facility is gearing up for commercial supply of gas by January 2005.

As things stand today, the GSPL would be required to carry 3 million cumd of gas from Shell Hazira by 2005. By then, Petronet LNG is likely to scale up its throughput via the GSPL lines by another 2 million cumd, taking the aggregate volume handled by the carrier to 15 million cumd.

However, the Shell Hazira facility is likely to come good for more volumes as far as GSPL is concerned with the regasification plant there yet to forge any other tie up for gas transportation.

At the present capacity of 2.5 million tpa, this leaves the gate open for another 7 million cumd and the GSPL should be looking at gobbling up more of gas, given its plans to expand its carrier network.Thus, it has come as no surprise that GSPL clocked a revenue of Rs 150 crore in 2003-04 from its transportation business, even with the traiff being revised downwards in excess of 25 per cent over the last two years.

The company has set itself a target of Rs 200 crore for the current fiscal, bearing fully in mind further such reductions in tariff with the volumes headed northwards. Clearly, the GSPL has reason to believe that it would have sufficient business on hand once it goes in for the second phase of grid expansion that will be spread over the next 18-24 months.

The three major routes shortlisted by GSPL for expansion include the 150-km Hazira-Vapi in south Gujarat that will take gas to the chemical industrial estate along the Gujarat-Maharashtra border.The other two stretches are in the hitherto unchartered terrain of Saurashtra.

These include the 250-km link between Ahmedabad and Rajkot and the 225-km route between Ahmedabad and Pipavav. Which leaves untapped the vast distance that will take gas to Kutch and with the Mundra-Kandla belt getting hotter by the day as industrial destinations, this may well be the next route on the GSPL agenda.

Just as plans involving investment to the tune of Rs 1,500 crore over the next two years are getting finalised at the Gandhinagar headquarters of GSPL, the one thing that seems to be least on the company's priority list seems to worry about funds.

This, despite the fact that the parent company — GSPC — going full steam ahead with exploration and production, where it is planning to put as much as Rs 900 crore over the next one year.

The rationale is that the group needs to expand its gas production base even as it keeps enhancing its carrying capacities. And with the K-G basin exploration block expected to give a fillip to the Hazira fields, GSPL could be on to a winning ticket with its fast expanding gas grid network.

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