New Delhi: The oil ministry will soon approach the Cabinet for about Rs 6,000 crore in viability gap funding (VGF) for the proposed gas grid in the northeast. Indradhanush Gas Grid Ltd (IGGL), a joint venture of Indian Oil, ONGC, GAIL, Oil India, and Numaligarh Refinery, plans to lay 1,600-kilometre northeast gas grid at a cost of about RS 10,000 crore. IGGL would need about 60% funding support from the central government for this, an official said.
Without funding support from the Centre, state firms will find it hard to launch the project, the official said, adding that the project was crucial to building the national gas grid and the economic development of the northeast region.
The government had in 2016 provided a capital grant of Rs 5,176 crore, or 40% of the project cost, for 2,500-km-long Jagdishpur-Haldia and Bokaro-Dhamra Gas Pipeline (JHBDPL) project, which GAIL is currently executing.
A higher 60% project funding support from the Centre would be needed for the northeast gas grid project since it is tougher than Jagdishpur-Haldia project due to the physical and economic conditions in the region, the official said. Indradhanush Gas Grid was set up in August 2018 but has not made much progress in a year due to lack of clarity on project financing.
The oil ministry had earlier hoped to receive the Cabinet’s approval on funding ahead of the general election but the process got delayed. Delay in funding can affect the timelines and cost of the project that connects eight states of Assam, Arunachal Pradesh, Meghalaya, Manipur, Mizoram, Nagaland, Tripura and Sikkim.
The pipeline would connect to the proposed national grid at Guwahati. At present, about 16,800 km of natural gas pipeline is operational and about 14,200 km of pipelines are being developed across the country to increase supply of gas to households and industries.
The government plans to raise the share of natural gas in country’s primary energy mix to 15% by 2030 from 6% now. In its quest to turn India into a gas-based economy, the government is encouraging companies to build more gas pipelines, import terminals and compressed natural gas distribution stations. Increased transport and distribution infrastructure and production capability can boost local consumption of natural gas, which is a relatively cleaner fossil fuel.
Sign Up for Newsletter
Sign up to receive our free newsletters!
We do not spam. We value your privacy!