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Seize the golden opportunity to build on natural gas

The time to take advantage of natural gas is now. CNG is a game-changer. Government and industry should seize this opportunity in quick time.

IE has been pointing to Tamil Nadu gaining pre-eminence in sectors like automobiles, auto components and information technology besides the strong base already laid in traditional industries like leather, sugar, cement and textiles. In the last two decades, the state has made great strides in glass, tyres, and electronics.

The state has been missing out the considerable potential for mega-sized investments in chemicals, fertilizers, petrochemicals and pharmaceuticals. IE has been pointing to the contrast provided by Gujarat and Maharashtra in building a lot of industrial capacities based on natural gas. These two states account for a significant share of the consumption of natural gas.

Gujarat, the gas gurgler!

In my visits to Gujarat, I noticed large capacity fertilizer plants, power plants, chemical and pharmaceutical units, steel mills, manufacturer of ceramic tiles, public transportation and piped gas supply for domestic use are based on gas. Large volumes of gas are imported in a couple of ports to meet the increasing demand from these units.

Natural gas has been an elegant, economical, and eco-friendly raw material. With global availability recording huge increases, especially shale gas production in the US, prices have moderated over the last three years. The long-term outlook also appears good as the contract with Qatar ensures supply at around $ 6-7 per MBTU.

From the late 1980s when the 1900 km HBJ pipeline was constructed to transfer gas from the Bombay High fields to Gujarat, Rajasthan, Madhya Pradesh and UP there has been a massive increase in production of fertilizers, LPG and power. IE has been demanding a share of this gas for the south. For a short while, the Aditya Birla group planned to import gas at Ennore but soon dropped the proposal. Hopes revived when Reliance Industries struck gas at the Krishna-Godavari Basin in 2008. Even then, disappointingly, the southern states, except Andhra, did not lay claim to a share of this. Reliance put a 1400 km pipeline to transfer gas from Kakinada in AP to Bharuch in Gujarat that fed to West and North Indian user-fed industries.

MISSED OPPORTUNITY

In January 2010, the government announced the policy in the Lok Sabha on extending the gas grid to the southern and eastern parts of India. Sadly, the southern governments allowed the opportunity to slip. No groundwork was carried out to inform the public on the multiple benefits of using natural gas. On opposition from a few hundred farmers, the construction of the gas pipeline from Kochi to Bengaluru via Tamil Nadu was stopped. Despite the Supreme Court ruling resumption of construction, the project continues to be in limbo.

A welcome development is the construction of a terminal at the Ennore Port by Indian Oil for importing, storing and conveying compressed natural gas (CNG) through pipelines at a cost of around Rs 5500 crore. Contracts have been awarded for supplying piped CNG to several cities in the state. Indian Oil, Adani, Torrent, GAIL, HPCL, and Bharat Gas will play critical roles in this initiative.
There is also the prospect of Chennai metro getting piped gas for its residents, through the elegant, economical and much safer way of conveying gas. The five-decades-old system of supplying gas in heavy cylinders could be phased out of Chennai!

The highly politicized Tamil society witnesses agitations galore. Concerted efforts are needed by the government, GAIL and Indian Oil to publicize the welcome aspects of natural gas. A beginning should be made with the vernacular media. While the large PSUs will have to play a big role, equally important is the role of industry associations like CII, ASSOCHAM, and FICCI.

Copious availability of gas will also trigger large capacity power and petrochemical plants. These involve substantial investments running to thousands of crores of rupees. Importantly, public transportation can switch to CNG like in Delhi, which is far more eco-friendly compared to diesel. CNG is a game-changer. Government and industry should seize this opportunity in quick time. –SV

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