Mumbai: Three years down the line, India is likely to have increased supplies of natural gas but too few pipes to carry them as infrastructure fails to keep pace with the coming supply surge.

Implementation hurdles and unviable tariffs have slowed work on pipelines, threatening the target to add 15,918km of pipelines to the existing 12,144km by the end of 12th Five-year Plan in March 2017, two people familiar with the matter said, requesting anonymity.

The Petroleum and Natural Gas Regulatory Board (PNGRB), which monitors and promotes natural gas transmission and distribution, had projected a doubling of transport capacity from 206 million standard cubic metres per day (mscmd) to 415 mscmd by March 2017.

The delays could mean that while gas supply may pick up beyond 2017 when several liquefied natural gas (LNG) terminals become operational and supplies from domestic sources improve, there will not be adequate infrastructure to transport gas, especially to the eastern and central parts of the country.

Pipeline work is complete only on 2,700km, or 17% of the target, and is under way for an additional 4,000km. Projects to lay 6,200km pipelines are in different stages of being bid out by PNGRB, while there is no clarity on the final 3,700km, according to data from GAIL (India) Ltd and PNGRB. India’s gas demand will grow to 378 mscmd by March 2017 while supply will touch 300 mscmd through enhanced domestic production and higher LNG imports, according to PNGRB’s projections.

While domestic gas from Oil and Natural Gas Corp. Ltd (ONGC), Reliance Industries Ltd (RIL), Oil India Ltd and Cairn India Ltd could add up to 156 mscmd, imported LNG could touch 144 mscmd, to be supplied from 10 LNG terminals, up from the current four.

The regulator’s vision document 2030 outlining the targets was released in May 2013.

“The document needs to be revised as many pipelines have been cancelled or are getting delayed. But the board has yet not decided when to do that," said a PNGRB official, one of the two people cited earlier.

Although some offshoots of the major pipelines and regional networks will be ready by March 2017, a large part of the work might spill over into the next five-year plan, the official said.

Several key projects have run aground. Following local protests, GAIL on 23 April cancelled contracts worth 3,400 crore to build a 1,156km Kochi-Kanjirkkod-Bangalore-Mangalore pipeline. Earlier, in mid-2012, delayed implementation forced PNGRB to cancel authorization for four pipelines awarded to Reliance Gas Transportation Infrastructure Ltd, a subsidiary of RIL. These pipelines were planned to bring natural gas from RIL’s Krishna-Godavari basin fields to Haldia, Chennai, Tuticorin and Mangalore.

Expected to come on stream by 2016, the four pipelines, along with GAIL’s Kochi-Mangalore pipeline, accounted for nearly one-fourth of the 12th Plan target, with a total length of 3,784km and a capacity to transport 96 mscmd.

RIL, GAIL and PNGRB did not respond to emailed queries.

A top official of GAIL, the second among the two people cited earlier, blamed improper planning by PNGRB but said GAIL would be able to supply gas when it arrived.

“There are three main issues to address for the growth of natural gas in the country, accessibility, affordability and availability," he said. “In the current regime of policymaking, these three issues are not in sync."

B.S. Negi, a former member of PNGRB, who was also director of planning at GAIL, pointed to the problem with gas transport tariffs. “Infrastructure should precede the growth of supply, but that can happen only if the tariff structure is conducive to incentivize companies to build pipelines," he said. “The current tariff structure is highly irrational."

The tariff to transport the same amount of gas across the same distance invites different charges across different parts of the country, he said, adding that this has led to uneven development of pipeline infrastructure.

The PNGRB vision document itself points out that states such as Gujarat, Maharashtra, and Andhra Pradesh, which are closer to gas sources, have benefited from higher gas utilization and gas market development, while others such as Punjab, Haryana, Jharkhand, Uttarakhand, Karnataka, Kerala, Bihar and Chhattisgarh with inadequate pipeline infrastructure are gasping for gas.

India’s gas transport network is weaker than those of other gas-based economies, according to Manish Aggarwal, partner and head of energy and natural resources at KPMG India.

“It’s more of a cause-and-effect story. It’s true that insufficient domestic gas supplies have impacted the implementation of some pipeline projects," said Aggarwal. “However, many delays are due to issues with local clearances, project coordination and centre-state conflicts because of the project’s impact on farmers."

GAIL’s decision to cancel its Kochi-Mangalore project is a manifestation of all these concerns, he said.

Gas pipelines currently operational include India’s oldest pipeline run by GAIL, the Hazira-Vijaipur-Jagdishpur pipeline, Dahej-Uran-Dabhol pipeline, RIL’s East-West Pipeline, the Vijaypur-Kota pipeline and regional pipeline networks of GAIL, Gujarat State Petronet Ltd, Gujarat Gas and Oil India Ltd, according to PNGRB data.

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