GSPL gets extension on pipeline project

GSPL gets extension on pipeline project

Ahmedabad: A consortium led by Gujarat State Petronet Ltd (GSPL) has been given an extension on the Mallavaram-Bhopal-Bhilwara-Vijaipur pipeline (MBBVPL) project after it missed a deadline on financial closure.

An email sent to GAIL on Tuesday did not elicit any response till press time. The regulator has now given the consortium until 2 July to tie up all the funding, according to its order, of which Mint has a copy.

The project, estimated to cost 5,000 crore, will run through Andhra Pradesh, Rajasthan and Madhya Pradesh and be 1,611km long, said GSPL officials who didn’t want to be named. The grouping had emerged as the lowest bidder for the project, beating GAIL.

Bids were called in 2010 for the project with the authorization letter being issued in 2011.

The capacity of the gas pipeline will be close to 76.25 million standard cubic metres per day (mmscmd) with some scope for expansion, said the officials cited above.

In its 8 June order, PNGRB imposed a penalty of 1 lakh on the consortium while barring it from participating in any bids by PNGRB for a period of one month from the order date. A bench comprising PNGRB chairman S. Krishnan and member, legal, Y.P.C. Dangay heard the matter regarding non-compliance with the mandatory requirement of achieving financial closure within 180 days of authorization on 8 June.

With authorization granted in July last year, the 180-day period was set to end on 3 January. The additional extension of 180 days that the regulator granted will end 2 July, as per the order. If GSPL fails to achieve financial closure by this date, the authorization could be terminated.

The consortium could only begin tying up funds after Aptel ruled in its favour in February, officials told the regulator. The bench was informed that bank loan sanction letters to the tune of 2,200 crore had been received by GSPL, and others were expected shortly. Some letters had been put on hold because of the dispute, they said.

“We are hopeful of raising the 5,000 crore project cost by the end of this month," an official representing the consortium said on condition of anonymity.

The bench observed that the group had made substantial progress in various areas, besides financial closure, such as environment impact assessment and a detailed engineering survey. A GSPL official said it had tied up gas supplies for three cross-country projects, including the MBBVPL, Mehsana-Bhatinda and Bhatinda-Jammu-Srinagar pipelines.

The consortium has formed a special purpose vehicle, GSPL India Gasnet Ltd, to implement the projects. GSPL has a 52% stake in the SPV, with Indian Oil Corp. Ltd holding 26%, and Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd having 11% each.

The cross-country pipelines signify the emergence of GSPL as a national firm in gas transportation. The firm currently operates about 2,000km of pipelines in Gujarat. The MBBVPL and Mehsana-Bhatinda pipelines will eventually be integrated with other pipelines such as the Hazira-Vijaipur-Jagdishpur and Surat-Paradip pipelines as part of the evolution of the long-awaited national gas grid, important for the country’s energy security.