Financial Daily from THE HINDU group of publications
Wednesday, Mar 22, 2006
Industry & Economy
States - Andhra Pradesh
Gas grid could come up along 4 major AP corridors
Hyderabad , March 21
Given the demand-supply mismatch and the huge gas find in the KG-basin region, the Andhra Pradesh Government, through strategic partners, plans to develop a gas pipe grid along four major dense corridors of the State.
These corridors would be Kakinada-Vizag, Hyderabad-Karimnagar, Hyderabad-Anantapur, that could potentially connect Bangalore, and Vijayawada-Nellore and Kadapa, that could be reached out to connect Chennai.
This follows a high power meeting that was based on a demand study for natural gas and proposed routing of the gas grid in Andhra Pradesh, undertaken by IDFC Private Equity and INCAP, through consultants Ernst & Young.
According to the study, the demand distribution indicates the westward line from Kakinada could be most lucrative. The gas volumes on this trunk route indicate possibility of accommodating more than one pipeline.
At a review meeting, it was decided to firm up plans for development of the gas grid transmission pipelines infrastructure and the capital cost for trunk sections is estimated at Rs 4,000 crore, which would mean an equity requirement of Rs 1,000-1,400 crore in a three-five year time-frame.
This, the Government and consultants felt, could be potentially met through raising resources from financial investors and internal accruals.
The State-wide network, according to the E&Y study, shows that this grid will enable optimised consumption of natural gas from the KG-basin within the State and also ensure all round economic development.
The State Government has been toying with the idea of the gas grid given the acute demand-supply mismatch over the years. Current gas supply is being met from the existing ONGC gas fields through the GAIL gas pipeline network localised in the KG basin. Barely 40 per cent of the overall requirement for power and other sectors is being met currently.
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