India proposes viability gap fund to meet gas infrastructure target

India’s Oil Ministry is proposing a viability gap fund to meet the government’s target of doubling the country’s gas pipeline network to 30 000 km over the next few years. The proposal comes ahead of Prime Minister Narendra Modi’s second meeting to review infrastructure progress throughout the country.

Finance Minister Arun Jaitley’s budget, announced in July 2014, included more room for foreign investment, infrastructure spending and a goods and services tax in an attempt to boost economic growth. It also proposed to develop an additional 15 000 km of gas pipeline systems to complete the gas grid across India using public-private partnership models, bringing the pipeline network to 30 000 km. Since the announcement, however, the proposed new pipelines have not progressed from drawing board level due to concerns from developers over the lack of gas supplies and customers. In light of this issue, the Oil Ministry has proposed a viability gap fund (VGF), similar to the support given to transport infrastructure projects, for gas pipelines.

Speaking at the PetroFed Oil & Gas Awards, Oil Secretary Saurabh Chandra noted that 11 000 km of pipeline have been authorised by the Petroleum and Natural Gas Regulatory Board (PNGRB). "For the remaining 4000 km, a PPP model is being looked at. We are working very closely with PNGRB to give shape to this model," said Chandra.

Edited from various sources by Rosalie Starling

Sources: Economic Times, Business Standard, The Asian Age

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