GAIL’s 1,724-km Surat-Paradip Natural Gas Pipeline Project Terminated

GAIL’s 1,724-km Surat-Paradip Natural Gas Pipeline Project Terminated

The Petroleum and Natural Gas Regulatory Board (PNGRB) has terminated the Surat-Paradip natural gas pipeline project by GAIL India owing to delays. The regulator has also ordered encashing the state-owned firm’s entire performance bank guarantee of Rs 200 million.

The proposed 1,724-kilometre project, touted as the first pipeline in the country connecting the eastern and western coasts, would have seen an investment of Rs 60 billion.

In its order dated March 13, the downstream regulator said the ground progress made in the project by the company was “nil” even after six years.

Under the terms of internally financed projects, an entity is supposed to submit its detailed feasibility report and financial plan within 120 days of authorisation, and GAIL failed to do so. Following this, in September 2015, the PNGRB ordered encashing 25 per cent (Rs 50 million) of the performance bond submitted by GAIL for failing to achieve financial closure. GAIL had got the authorisation to lay the pipeline in April 2012.

“As per provision 16 (1) c, the entity shall make good the encashed performance bond, within a week of encashment of part of performance bond, failing which the remaining amount shall also be encashed and authorisation of the entity terminated,” the order said. Read More

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