IOC plans capex of Rs 2k cr, to commission 1,000-km pipelines in FY18

State-run Indian Oil Corporation plans capital expenditure (capex) of Rs 2,000 crore and commission around 1,000 km of pipelines in the current financial year to further augment its current pipeline network of around 13,000 km. According to Anish Aggarwal, director-pipelines, Indian Oil Corporation, same as last year a majority of the commissioning will be in the eastern part of the country. These include Jharsukuda-Khunti (214 km), Paradip-Haldia-Durgapur LPG pipeline (around 650 km) and Kolkata ATF pipeline (28 km) apart from the one section of the Salaya-Mathura pipeline (84 km) which was mechanically completed last year but will be commissioned this year.

The refiner’s capex in 2016-17 in pipelines stood at Rs 1,500 crore wherein around 1,100 km of pipeline sections were commissioned. Major works included Paradip-Haldia-Barauni crude oil pipeline augmentation, Salaya-Mathura pipeline and Paradip-Raipur-Ranchi pipeline. IOC is also in the process of laying a petroleum pipeline to the neighbouring Himalayan Nation of Nepal wherein fuel from Motihari in India will be supplied to Amlekhganj in Nepal, though there are plans to extend the line till Chitwan on the Nepal side, as reported by FE earlier.

Recently, India extended the fuel supply agreement with the neighbouring nation for five years. Nepal gets around 2 lakh kilo litres of fuel from Indian Oil every month. Once the pipeline—69-km long to be built at an approved cost of Rs 325 crore—is in place supply, will be through the pipeline instead of trucks as is the case at present. Aggarwal added the company achieved an overall capitalisation, including the mechanically completed projects, of Rs 3,000 crore last year, of which Rs 1,700 crore was in the eastern part of the country. These were in Paradip-Haldia-Barauni crude oil pipeline augmentation and Paradip-Raipur-Ranchi pipeline mostly.

Eastern states is at the centre of the National Democratic Alliance government’s pipeline push as they have been historically neglected and lacks infrastructure. The Urja Ganga pipeline project in the eastern part of the country will connect five cities and play an important role in developing city-gas distribution network. It will also be critical for supplying gas to the defunct fertiliser units in Sindri (Jharkhand), Barauni (Bihar) and Gorakhpur (Uttar Pradesh) which the Narendra Modi-led government plans to revive to ensure self-sufficiency of nutrients required by farmers. Overall, IOC plans a capex of Rs 20,000 crore in 2016-17, as told by IOC chairman B Ashok to FE earlier.

As per Aggarwal, the combined capex for all pipeline projects underway across the country is R20,000 which will be spent over the next four-five years. “Projects get commissioned over a period of time, around 30-36 months, after getting statutory permissions,” he added. IOC also plans to submit bids by June for the Gorakhpur-Khandla pipeline for which Petroleum and Natural Gas Regulatory Board has invited an expression of interest.