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Paradip-Haldia-Durgapur LPG pipeline  

IndianOil to invest Rs 1,700 cr on new pipelines

IndianOil (IOC) is investing Rs 1,700 crore to enhance its pipeline network.

Some of the major projects include the 700-km Paradip-Haldia-Durgapur LPG pipeline connecting its refineries and bottling plants, the 400-km Jaipur-Bijwasan naphtha pipeline and expansion of the Paradip-Haldia-Baurani crude pipeline.

“These are investment proposals awaiting approval. They will be finalised and given the go-ahead by December and commissioned in 30 months from the date of commencement,” Mr K.K. Jha, Director (Pipelines), told Business Line.

“We already have projects worth Rs 6,400 crore under various stages of execution. These are additional investments under consideration,” he said. The new projects are scheduled to be operational by mid-2013. Earlier this year, IOC commissioned its first natural gas pipeline, the 132-km network from Dadri in Uttar Pradesh to its Panipat refinery.

Mr Jha said the Rs 1,700-crore investment in new pipelines does not include the inter-State gas pipeline projects, which are part of the bidding rounds. The Petroleum and Natural Gas Regulatory Board (PNGRB) has initiated bidding for four inter-State gas pipelines. The IOC-led joint venture has bid for the Mallavaram-Bhilwara and Mehsana-Bhatinda pipeline projects covering 1,700 km each.

The company expects the bidding process to be completed by the end of this month. “PNGRB has to decide on the bids. We hear they will announce it by the end of this month,” Mr Jha said.

According to a research report by ICICI Securities, the consortium of IOC, Gujarat State Petronet Ltd (GSPL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) is better placed on easy financing and risk sharing for the gas pipeline projects.

“The combined capex for the four pipelines is anticipated at Rs 22,400 crore. If the GSPL JV (joint venture) wins all the bids, capex sharing with oil marketing companies will make it easier to arrange for necessary financing as GSPL's solvency ratio would not be stretched. Moreover, retail fuel outlets of IOC, BPCL and HPCL would be used for CNG sales in the future and the JV would have a readymade market for gas supplies to these outlets,” said the report.

IOC has already announced Rs 47,000-crore capital investment for setting up new refineries and expanding capacity, pipeline infrastructure and fuel outlets.

The Hindu Business Line, New Delhi, September 24, 2010

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