Cabinet clears gas-pooling, Haldia gas pipeline proposals

New Delhi: The Union Cabinet on Tuesday cleared a proposal for gas pooling in the country to increase operational efficiency of urea manufacturing units, stating that it would help farmers and would also result in savings of about `1,550 crore of subsidy.
The government also cleared a proposal worth `10,000 crore to set up the 2,000km long Haldia (West Bengal)-Jagdishpur (Uttar Pradesh) gas pipeline which will supply gas to cities in eastern India like Gorakhpur, Kashi, Patna and Kolkata.
Gas pooling involves averaging out prices of domestic natural gas and imported liquefied natural gas used by fertilizer plants to make the cost of fuel uniform and affordable.
”The focus of today’s cabinet meeting were… making India autonomous in field of urea manufacturing and gas pooling. (It has) far-reaching economic decisions for improvement in operational efficiency of urea manufacturing units and will help farmers of India. It is a momentous decision for farmers of India. The pipeline project is going to completely alter the economic landscape of eastern India,” Union telecom and information technology minister Ravi Shankar Prasad told reporters after the cabinet meeting.
The minister explained that the biggest beneficiaries of the pipeline would be citizens of eastern India as the move would result in piped gas supply to nearly 10 million families against the present 4 to 4.5 million families.
At present, India’s total urea requirement is around 300 lakh metric tonnes (LMTs) per annum and of that, nearly 230 LMTs of urea is produced annually from the indigenous urea units while balance is being met by purchases from the international market.
Prasad also announced cabinet‘s approval for the revival of the closed Barauni unit of Hindustan Fertilizer Corp. Ltd (HFCL) and Gorakhpur unit of Fertilizer Corp. Of India Ltd through bidding.
“For the country’s development, these are very important decisions. The Prime Minister believes that India won’t develop until eastern India develops. These steps are for developing eastern India… This decision (pipeline project) is a milestone programme in that direction,” Prasad added.
An official government statement explained that the two units were lying defunct and have not been in operation since 2004.
Each unit will be revived through the bidding route with an approximate investment of `5,000-6,000 crore and would also create employment for 500 direct and 2,500 indirect workers, it added.
“This decision, taken along with gas pooling, will enable these units to get gas at pooled price on their revival, making them globally competitive,” Prasad added.
The two units will be linked to the Haldia-Jagdishpur gas pipeline for gas requirements.
Meanwhile, in an another decision, the Cabinet Committee on Economic Affairs (CCEA) approved the allocation of `4,948 crore as gross budgetary support for augmenting India’s strategic fuel reserves under the Indian Strategic Storage Programme for Crude Oil by Indian Strategic Petroleum Reserves Limited.
“This decision will facilitate in dealing with the situation of any disruption in the supply chain of crude oil and abnormal spike in world oil prices,” Prasad said
The funds will go towards filling crude oil in the reserve at Visakhapatnam with a capacity of 1.33 million metric tonnes (mmt) as well as used for filling up reserves being constructed at Mangalore (1.50 mmt) and Padur (2.5 mmt), a government statement said.
“The Ministry of Petroleum and Natural Gas will continue to explore alternative models for financing the remaining cost of crude oil to fill the Mangalore and Padur caverns. This will include commercial utilization by other interested parties,” the government statement said, adding that the Mangalore and Padur reserves are likely to be ready by October this year.
For a consistent definition of a private sector company for availing financial support by the government under the public-private partnership model, the CCEA approved a change in the definition of a ‘private sector company’ to mean a company which is ‘not a government company’.
This is expected to remove ambiguity in interpretation of the term ‘private sector company’ and enable quick decision-making, a government release said.
Source: Mint; 01 April 2015

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