Improved raw materials supply and a brighter economy have enabled pipeline works to recommence following years of delays, writes Rituparna Ghosh
A project to build the world's longest LPG pipeline in India is nearing completion and commissioning is due to take place by the end of 2023, project engineers say.
The 2,800km pipeline from Kandla on the northwest coast of Gujarat state to Gorakhpur in Uttar Pradesh, northern India, has faced delays since prime minister Narendra Modi laid the foundation stone at Gorakhpur in 2019. The project — developed by state-controlled refiners IOC, Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL), with 50pc, 25pc and 25pc shares, respectively — was originally due to open in April 2020. But construction was first hit by the pandemic in 2020-21, followed by difficulties sourcing raw materials as a result of the war in Ukraine.
Improving global raw material supplies and increasing economic activity in India have enabled the project to get back on track, and it is now about 80pc complete, with the only hold-up over land acquisition in Gujarat, engineers say. Once complete, the pipeline will carry about 8.3mn t/yr of LPG, or a quarter of India's total demand, into the country. IOC expects it to cost more than $1.5bn.
The pipeline will significantly reduce transportation time and serve demand for LPG as a cooking fuel in three of India's most populous states — Gujarat, Madhya Pradesh and Uttar Pradesh — covering a total of 45 districts and 340mn people, enabling the government and refiners to better penetrate the last low-income areas where solid fuel use for cooking is predominant.
Supplies for the line will be sourced by import terminals at Kandla, Dahej and Pipavav, as well from two refineries — IOC's 276,000 b/d Koyali and BPCL's 156,000 b/d Bina plants. Additional LPG will also be fed to the line from Indian conglomerate Adani's 3.6mn t/yr Mundra terminal along the Mundra-Mithirohar pipeline at the Mithirohar pump station. IOC is to expand its 600,000 t/yr Kandla terminal to 2.5mn t/yr this year, while HPCL's Dahej terminal can import 5mn t/yr of LPG. The Pipavav facility can receive 2mn t/yr — of cargoes only up to 1,200t.
LPG deliveries will go to 22 bottling plants around the three most populous states, with IOC and BPCL owning eight apiece, and HPCL owning six plants.
IOC owns an LPG import terminal at the east coast Paradip port in Odisha state. This facility, plus a refinery at Paradip and import terminals in Haldia, feed the Paradip–Haldia–Durgapur pipeline, which is being extended from Durgapur in West Bengal to Jharkhand and Bihar states to the north, taking its total length to 888km.
These major infrastructure projects should in theory boost supply in inland India and in turn consumption. But distributors are largely targeting lower-income rural users under the PMUY scheme, which have lower refill rates than more affluent urban users and are more sensitive to retail prices. Higher prices over the past year have led to many such households reducing or stopping LPG purchases and turning back to harmful solid biomass fuels such as wood.
India's LPG demand is expected to rise only slightly this year, by 1.5-2pc, according to IOC and Indian companies Crisil, Icra and Antique Stock Broking. Consumption grew by 2.9pc to 28.7mn t last year, after increasing by 1.5pc to 27.9mn t in 2021, oil ministry data show. India's LPG imports increased by 2pc to 17.6mn t last year, while domestic output rose by 5.6pc to 12.9mn t.
