Northeast Gas Grid Project

  • Category
    Economy
  • Published
    14th Jan, 2020

Context

Recently, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has given its approval for viability Gap Funding/ Capital Grant of 60% of the estimated cost of Rs. 9,265 crore for the Northeast Gas Grid project to Indradhanush Gas Grid Limited (IGGL) who implements it.

About

  • The Northeast Gas Grid Project will connect Guwahati to the major Northeast cities and major load centers. It is 1, 656 km long.
  • The project is being implemented under ambitious Urja Ganga Gas Pipeline Project.
  • Besides connecting all the state capitals in the region, the pipeline will also connect with the National Gas Grid through Barauni-Guwahati Gas Pipeline, which is being laid by GAIL.
  • The pipeline will enable the supply of piped cooking gas to households and CNG to automobiles, besides fuel to industry.
  • Implementing Agency: The North-East pipeline grid is to be implemented by Indradhanush Gas Grid, a joint venture of state-owned GAIL India, Indian Oil Corp (IOC), Oil and Natural Gas Corp (ONGC), Oil India Ltd (OIL) and Numaligarh Refinery Ltd (NRL).

    Pradhan Mantri Urja Ganga project:

    The gas pipeline project aims to provide piped cooking gas to residents of Varanasi and later to millions of people in states like Bihar, Jharkhand, West Bengal and Odisha.

    • From Varanasi’s perspective, an 800-km long MDPI pipeline will be laid and 50,000 households and 20,000 vehicles will get PNG and CNG gas respectively. The government estimates that around 5 lakh gas cylinders will be sent at rural areas annually.
    • According to GAIL, with the Urja Ganga project, 20 lakh households will get PNG connections. The project is said to be a major step towards collective growth and development of the Eastern region of India.
    • GAIL has built a network of trunk pipelines covering the length of around 11,000 km. With Urja Ganga project, this number will further increase by 2540 km.

Objectives of National Gas Grid

  • To remove regional imbalance within the country with regard to access for natural gas and provide clean and green fuel throughout the country.
  • To connect gas sources to major demand centres and ensure availability of gas to consumers in various sectors.
  • Development of City Gas Distribution Networks in various cities for the supply of CNG and PNG.


Significance

  • The funding support to the project is actually a leg of a broader goal of the government to raise the share of natural gas in the country’s energy mix to 15% by 2030 from current 6.2%.
  • The government has envisaged developing the National Gas Grid. At present, about 16,788 km natural gas pipeline is operational and about 14,239 km gas pipelines are being developed to increase the availability of natural gas across the country.
  • Socio-Economic and Environmental Benefits
    • Development of industrial climate in eight states of the north-eastern region i.e. Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura will help in reduction in the usage of kerosene, wood, etc. due to increased usage of environment friendly fuel natural gas thereby improving the environment in the region.
    • Improvement in the standard of living of peoples living in the region.
    • It will boost Exploration & Production activities and connect regional gas sources with pipeline network for early monetisation of natural resources in the region.

      Viability Gap Funding

      • It is usually seen that many projects, like a road connecting a rural area, generates high economic returns, but the financial returns may not be sufficient for a profit seeking investor.
      • In such condition, the project would not attract private investment. In such cases, the government extends its support to the investors by sharing a f fraction of the cost, making the project viable.
      • For the successful completion of such projects, the government has designed Viability Gap Funding (VGF).
      • Viability Gap Finance means a grant to support projects that are economically justified but not financially viable.

Conclusion

The Northeast Gas Grid is a part of the larger vision to usher in Gas based economy and to increase the share of natural gas in country's primary energy mix.

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