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q~1Rlti'i ~ Qlcpffiq; ~ faPlt11Jiq; mt Petroleum and Natural Gas Regulatory Board i;r~CIB, ~ts~, ~-m, ~ Rctn- i 10001 PNGRB 1st Floor, World Trade Centre, Bahar Road, New Delhi - 110 001 PNGRB/Auth/7-Misc(38)/2020/960/050 4th November, 2020

To, Shri Devendra Mehta 1015, Second floor, Sector-37, Faridabad, Haryana, Pin:121 002

Subject: Application under the RTI Act, 2005

Sir,

With reference to your online application with Registration No. PNGRB/R/ E/20/00073 dated I 0.09.2020 under the RTI Act, 2005 and your subsequent communication which was received at PNGRB on 26.10.2020, depositing Rs.24/- in response to our communication dated 09.10.2020, the information requested by you is enclosed herewith.

2. If you are not satisfied with the information provided above, you may please contact the Appellate Authority of PNGRB at the following address:

Ms. Vandana Sharma Secretary, PNGRB, 1st Floor, World Trade Centre, Bahar Road, New Delhi - 110001

Yours faithfully

Encl.: As above - -04\\\\'"WU> (K. Kittappa) Joint Adviser l/C & CPIO \\ Petroleum and Natural Gas Board

Case No. Legal/166/2016

Order pertaining to Mis Gas Distribution Corporation Limited (APGDC) fo r alternative route to lay the pipeline from - Nellore instead of - Vijayawada - Nellore

The petitioner had filed a Writ Petition No. 42459 of2015 before Hon'ble High Court of judicature at wherein the Hon'ble Court vide order dated 27 .10.2016 directed the petitioner to submit a written

) representation to the 2nd respondent (PNGRB) expressing its views based on the contention raised in the writ petition for alternative route to lay the pipeline from Vijayawada - Nellore instead of Kakinada - Vijayawada - Nellore.

2. The petitioner filed the representation before the Board on 24th

1 November 2016.The matter was placed for the hearing on 26 h December 2016 before the Board. The petitioner was represented by Mr. K. Venkata Rao (Advocate), Mr. S. Narayanan (MD, APGDC) and Mr. Kapil Kumar Jain (COO, APGDC). ) 3. MD and the COO of the APGDC have initially explained their case by making a presentation which was subsequently supplemented by their legal counsel on legal issue. They were granted an opportunity to adduce any other document I evidence or written submission in order to substantiate to their representation which they denied.

Facts

4. Mis Andhra Pradesh Gas Distribution Corporation Limited (APGDC), vide letter no. APGDC/TECH/6002/PNGRB/2014-1 5/77 dated ~ L-- 07.08.2014 had submitted an Expression of Interest (EOI) u/r 4(1) to lay, build, operate or expand natural gas pipeline from Vijayawada (, Andhra Pradesh) to Nellore. The route of the proposed trunk natural gas pipeline was from ML V-5 of RGTIL's East-west pipeline at Boddanapalle (Krishna district) to Nellore (Sri Potti Sriramulu ) via , Prakasam districts. APGDC had indicated that natural gas up to ML V-5 ofEWPL shall be transported from Kakinada LNG Terminal utilizing additional capacity of EWPL. Approximate length of the proposed natural gas pipeline as indicated was 355 KM.

5. Accordingly, Public consultation process for APGDC's proposal for Vijayawada-Nellore natural gas pipeline was initiated on 28.08.2014. During this period, comments were received from Mis GAIL () Limited, Mis Gujarat State Petronet Limited (GSPL) and Mis Indian Oil Corporation Limited (IOCL). IOCL & GSPL in their comments had suggested that the pipeline should originate from Kakinada instead of Vijayawada with various justifications. GAIL had not given any comments.

6. Salient features of the comments submitted by GSPL and IOCL are summarized below:

GSPL: (i) The proposed arrangement of Vijayawada-Nellore natural gas pipeline does not ensure optimal utilization of the pipeline nor secure gas supplies, as the proposed pipeline is not connected with all possible sources of natural gas in the vicinity. ~ (ii) Direct connectivity with the onshore terminals of GSPC and RIL at Kakinada would open up options for the upcoming pipelines to secure gas supplies in future.

(iii) Supplies in the proposed pipeline would always be dependent on EWPL pipeline as the point of origin is proposed at MLV-5 of EWPL. Indirect connectivity shall create an advantage in favour of incumbent infrastructures. To create a level playing field the proposed pipeline should ideally originate from Kakinada where all the existing and proposed sources are located. (

(iv) If the corridor between Vijayawada-Nellore has direct connectivity with existing and proposed gas sources located at Kakinada, it shall integrate the natural gas pipeline infrastructure covering the entire East Coast of Andhra Pradesh with the sources located at Kakinada.

(v) As per the proposal submitted by APGDC, targeted customers would be paying tariffs of two pipelines (Zone- I tariff of EWPL+ tariff of proposed Vijayawada-Nellore pipeline) for transportation of gas. However, direct connectivity with the sources located at Kakinada would facilitate competitive tariffs for the customers along the pipeline route.

(vi) GSPL was of the view that PNGRB should modify the proposed pipeline EOI and invite bids for the development of Kakinada-Nellore natural gas pipeline having direct connectivity with the existing gas sources at Kakinada. ~ IOCL: (i) Point of ongm of the proposed pipeline should be at Kakinada instead of MLV-5 of EWPL for direct connectivity of the sources to have benefits of interconnectivity to MBBVPL and KSPL thereby forming the national grid. Customers in Nellore would still remam m 2nd Tariff Zone even after having originating point at Kakinada.

( (ii) The end point of the proposed pipeline should directly connect to Ennore-ThinlVallur-Bengal uru-Puducherry-N agapattinam­ Madurai-Tuticorin natural gas pipeline (ETBPNMTPL) at Thiruvallur instead ofNellore to form the national gas grid.

(iii) With the above changes, domestic gas from KGD6 field can flow to Tamil Nadu and Kamataka.

7. Consequently, an Open House discussion was held on 24.11.2014 with APGDC, GSPL, IOCL and GAIL. In response to the comments of GSPL and IOCL, APGDC also gave a brief presentation justifying why the proposed pipeline should originate from Vijayawada and not Kakinada.

8. GAIL submitted that Vijayawada should remain as originating point of the proposed pipeline considering excess capacities available in the pipelines emanating from Kakinada and in order to avoid infructuous investment on Kakinada-Vijayawada section. In response to the comments of GSPL and IOCL, APGDC gave a brief presentation justifying why the proposed pipeline should originate from ~ l- Vijayawada and not Kakinada. APGDC also indicated the hassles in the project execution which involves laying of approximately 250 km pipeline through major river crossings, bird sanctuary area and marshy area, likely to incur huge expenditure of about Rs. 1400 crore on cost basis.

9. IOCL communicated that the capital cost of VNPL based on existing costing comes to Rs. 825 crore while, the same for Kakinada­ Vijayawada-Nellore-Thiruvallur (KVNTPL) works out to be Rs. 1310 crore which is about Rs. 485 crore more than original cost. Going by the recent rounds of natural gas pipeline bidding, the maximum difference between competitively bid Zone-1 tariff of KVNTPL and VNPL would be in the range of Rs. 3 .5 to Rs. 4.0/MMBTU. In case of bidding for VNPL, the customers will bear Zone-1 tariff of EWPL (Rs.15/MMBTU) in addition to Zone-1 tariff (Rs. 7.5/MMBTU). While for KVNTPL, Zone-1 tariff is expected to be around Rs. 10.5 /MMBTU. Hence, any customer will have to bear around Rs. 12/M11BTU additional tariff, which will simply go to EWPL without any investment on their part and will result in windfall gain of thousand of crore over the economic life of the pipeline. Considering 50% capacity utilization of VNPL for 25 years and additional tariff@ Rs. 12/MMBTU, the additional burden works out to Rs. 4293 crore whereas by extending VNPL from both ends and inviting bids for KVNTPL instead would result in extra CAPEX of around Rs. 488 crore which would be well compensated by the competitively bid tariffs and will not be unfair to customers.

1O.Further, the overall tariff for reaching KG D-6 domestic gas to turns out to be much cheaper by having direct connectivity to k Thiruvallur (Chennai) from Nellore rather than moving in detour via Ennore since the CAPEX towards Kakinada-Nellore- Thiruvallur pipeline is Rs. 290 crore more than that required for the CAPEX of Rs. 1125 crore expected for Kakinada- Nellore pipeline. Extra CAPEX of Rs. 290 crore would translate to an additional tariff of Rs. 2 to Rs. 3 per MMBTU considering same volumes.

11.APGDC replied that to supply gas to Nellore from Kakinada, pipeline of higher size and/or compressor may be required en-route. The calculation carried by IOCL does not give details of line size or ( compressor and hence cannot be verified. Further, the proposed origin point of VNPL is kept downstream of Koppaka compressor station of EWPL; hence high pressure would be available at the starting point. In view of the above, the basis of the estimated transportation charges of Rs. 10.5/MMBTU, as shown by IOCL, is not clear and hence the indicated saving of transportation charges cannot be commented.

12.Comments submitted by all stake holders were deliberated in the Open House and the Board considered the following three options: -

(i) As the grant of authorization has been already awarded by PNGRB for Ennore-Nellore natural gas pipeline on 02.12.2014, pipeline section from Nellore to Thiruvallur suggested by IOCL cannot be considered for the proposed pipeline.

(ii) Bids may be invited for Vijayawada-Nellore natural gas pipeline exactly as per the Eol proposal submitted by APGDC considering the pipeline laying constraints in Kakinada-Vijayawada section as mentioned by APGDC, meeting the objective of improved ~ utilization of existing natural gas pipelines in the reg10n and avoiding infructuous investment due to laying of parallel pipelines.

(iii) Els.e, bids may be invited for Kakinada-Vijayawada-Nellore natural gas pipeline as per the viewpoints submitted by IOCL and GSPL in order to avoid cascaded transportation tariff of EWPL over and above the tariff for the proposed pipeline.

13. The Board had decided to originate the pipeline at Kakinada and not from Vijayawada mainly because of following two reasons: ( (i) Originating the pipeline from RGTIL EWPL would result in end consumers paying EWPL' s additional tariff over and above the tariff of the new pipeline. This should be avoided. (ii)By initiating the pipeline at Kakinada it considered that realistic transportation tariff would emerge through competitive bidding and the consumers would also have alternatives to choose gas supply either through EWPL or independent source at Kakinada.

14.The Board in its meeting held on 23.02.2015 had approved the option of inviting bids for Kakinada-Vijayawada-Nellore natural gas pipeline (KVNPL ). Accordingly Bids have been invited and the same is under process.

15.The petitioner in their representation dated 17.11.2016 and during their presentation given to the Board on 26. 12.2016, has repeated all the points which were stated during the evaluation of Eol and finalisation of the route of the pipeline. They elaborated the hassles in the project execution which involves laying of approximately 250 km ~ L \~~1 c 310 pipeline through major river crossings, bird sanctuary area and marshy area likely to incur huge expenditure. KVNPL passes through East and up to Vijayawada through fertile lands including coconut plants. Due to formation of the state of AP the land cost is soaring high & precious cultivable land is lost which has tremendous social impact. The acquisition of the land for RoU would be very difficult. It will cross Godavari River at two locations requiring costly HDD operations entailing huge expenditure.

The issues of Ro W availability through fertile lands including coconut ( plants, hassles in pipeline laying through major river crossings, birds sanctuary area and marshy area were already deliberated in the Open House session. APGDC in the present submission had stated the same and they have not brought any new facts or reasons. Hence, we issue the following order -

Order

In light of the submissions made before the Board, we don't find any merit in revising the route of the pipeline from Kakinada-Vijayawada-Nellore to Vijayawada-Nellore.

(K.K. Jha) (Subhash Chandra) (B. Mohanty)

Member (KKJ) Member (L) Member (BM) PETROLEUM & NATURAL GAS REGULATORY BOARD [Office of Member (BM)]

Case No.Legal/166/2016

Order pertaining to Mis Andhra Pradesh Gas Distribution Corportaion Limited (APGDC) for alternative route to lay the pipeline from Vijayawada-Nellore instead of Kakinada - Vijayawada - Nellore

In pursuance of the directions ofHon' ble High Court of Judicature at Hyderabad, vide Order on writ Petition No.42459 of 2015 dated 27.10.2016, the Petroleum and Natural Gas Regulatory Board (the Board) conducted an enquiry on the representation filed by Mis Andhra Pradesh Gas Distribution Corporation (APGDC) on 26.12.2016.

Facts

2. APGDC had submitted an Expression of Interest (EOI) to PNGRB on ih August, 201 4 to lay, buiid, operate or expand a natural gas pipeline from Vijayawada to Nellore (VNPL) in the State of Andhra Pradesh. After following the due process of public consultation and internal scrutiny, the Board decided to invite bids for a revised pipeline route connecting Kakinada with Vijayawada and Nellore.

3. The aforesaid Board decision to modify the gas pipeline route was, more or less, similar to the suggestions made by Indian Oil Corporation Ltd.(IOCL) and Guj arat State Petroleum Corporation Ltd. (GSPL). The reasons for originating the pipeline from Kakinada, and not from Vijayawada, are:

(a)The pipeline route ongmating from Vijayawada, as proposed by APGDC, would avail natural gas from Kakinada via East West Pipeline (EWPL ), which is already in operation. Accordingly, the consumers on the VNPL route will end up paying additional tariff of EWPL over and above the tariff of the new VNPL. (b )Alternatively, the pipeline originating from Kakinada would result in "realistic transportation tariff' emerging from competitive bidding. Besides, the consumers would have alternatives to choose gas supply either through EWPL or independent source at Kakinada.

4. Following the Board decision, bids were invited by PNGRB for the Kakinada-Vijayawada-Nellore Natural Gas Pipeline (KVNPL) by the extended bid closing date of 14.01.2016. However, finalization of the tender was stayed by the Order of the High Court of judicature at Hyderabad.

5. A fresh order of the Hon'ble Court came on 27.10.2016 directing the Board to conduct an enquiry so as to decide the feasibility of the ( suggestions made by the petitioner, Mis APGDC, in its representation within a period of three months from the date of receipt of the said representation. Till the disposal of the said representation, the Board was directed not to proceed further with the impugned notification vide public notice No.EOI./NGPL/BID/8/2015-1 dated 20.07.2015.

Findings

6. There are certain crucial factors which could form an integral part of the enquiry on the proposal received 'from APGDC.

7. The factors in support of KVNPL have been given in para 3 above. Basically, it is perceived that KVNPL will lead to comparatively lower tariff and market competition can be improved as consumers will have more alternatives to avail gas. However, such considerations suffer from the following drawbacks.

8. There is no scientific costs-and-benefits studies to support these views. During public consultations, IOCL provided some data and calculations which have been contested by APGDC. IOCL has not provided any proof/scientific evidence of data and projections and methodology used to arrive at cost & tariff. Nor has it provided an independent study to substantiate its arguments. The information and conclusions given by IOCL and GSPC are, therefore, not verifiable, nor sufficient.

9. Transportation tariff is basically determined by project costs and realized/expected revenue from gas transportation. Both the factors can be manipulated to generate a certain level of tariff. Therefore, it is all the more important to call for scientific studies, preferably by independent agencies.

10. The views and suggestions given by the Government of Andhra Pradesh assume critical importance, particularly, in the prevailing conditions of the domestic natural gas sector in which Right of Way (ROW) regulations relating to pipelines have posed a serious challenge to the effective implementation of projects. Such letters from the State Government sow·ces, including that from the Chief Minister of Andhra Pradesh addressed to Minster of State, Ministry of Petroleum & Natural Gas, Government of India, have stated the following: (i) There are already two gas pipelines originating from Kakinada. Lack of demand in the region has led to gross underutilization of pipeline capacity (around 15% ). Addition of a third pipeline as per the tender of PNGRB will worsen the situation. (ii) The terrain of the pipeline route from Kakinada pose difficulties in land acquisition for RDU and involve substantially higher project cost than what is stated by IOCL etc.

11. The views and suggestions given by the State Government deserves consideration with utmost diligence, as the support of the government is crucial for successful completion of the project, which in tu1n will help securing optimum project cost and demand for gas.

12. The Vijayawada-Nellore gas pipeline with a connectivity with the already operating EWPL will optimize pipeline capacity utilization and avoid infructuous investment resulting from idling capacity. This conform to the provision in ss 20 (5) of the PNGRB Act that the Board shall be ·.

guided by the objectives of promoting competition among entities, avoiding infructuous investment, maintaining or increasing supplies etc.

13. The above guiding factors also necessitate consideration of timeliness and relevance of the two alternative pipeline routes. APGDC, GAIL India Ltd. and the Government of Andhra Pradesh support the proposal relating to VNPL. In comparison major risks of demand and construction problems involving ROW clearances have been cited against the alternative proposal relating to KVNPL. Obviously, KVNPL involves far greater uncertainty than VNPL. If the project is unduly delayed as is the prevailing conditions with other pipelines authorized by PNGRB, then it may not only put additional burden in terms of enhanced project costs, but also deprive the gas consumers in the Vijayawada-Nellore area of availability of gas. Besides, lack of demand along the route from Kakinada to Vijayawada, as reported by the entities, will amount to loading the cost of the pipeline from Kakinada to Vijayawada on the consumers around Vijayawada and beyond.

14. Besides, construction of Vijayawada - Nellore pipeline does not foreclose the option in the future to extend the pipeline to Kakinada as and when the underlying market factors become favourable.

15. In comparison, the Kakinada-Nellore route of the pipeline appears to be facing major uncertainties in terms of demand for gas and timely completion of the project, which could substantially impact viability of the project. ORDER In view of the representation from Mis Andhra Pradesh Gas Distribution Limited and views of the Government of Andhra Pradesh, as outlined in preceding paragraphs, there is an urgent need to re-examine the feasibility of the pipeline route from Kakinada to Nell ore.

~(S::Niohanty)~ - Member (BM) D(o / 1 IJ. Dl 7