Ennore-Trichy-Madurai LPG Pipeline LPG Pipeline

FOR RESTRICTED CIRCULATION ONLY

De ta iled F easibilit y R eport on Ennore-Trichy-Madurai LPG Pipeline

Ennore

Chengalpet

Pondicherry

Trichy

Madurai

Pipelines Division

January 2013 CONTENT

Chapter Description Page No. No.

Executive Summary (i)

I Introduction 1

II Analysis of Alternatives 4

III Need and Justification 13

IV Design Philosophy 18

V Project Description 20

VI Capital Cost 28

VII Operating Cost 32

VIII Financial Analysis 35

IX Conclusions and Recommendations 37

Annexures

Executive Summary

1.0 INTRODUCTION

1.1 India is deficit in Liquefied Petroleum Gas (LPG). Industry imports LPG to the tune of 5 MMTPA to meet the domestic demand. South India, comprising Andhra Pradesh (A.P.), Karnataka, Kerala and Tamil Nadu, is also deficit in LPG.

1.2 In 2010-11 and 2011-12, the deficit of LPG in southern region was about 2.8 MMTPA and 3.0 MMTPA respectively. As per the latest supply-demand assessment, the demand in south India is expected to be about 6.4 MMTPA in 2016-17 and about 7.3 MMTPA by 2021-22. Domestic availability of LPG would be about 4.3 MMTPA and 4.5 MMTPA in those years. The deficit in 2016-17 is projected to reduce from the present level of 3.0 MMTPA to 2.1 MMTPA, mainly due to additional production of LPG after implementation of the proposed expansion plans at Chennai refinery of Chennai Petroleum Corporation Limited (CPCL), Kochi refinery, Mangalore refinery and Vizag refinery, and commissioning of Nagarjuna refinery. However, the deficit is projected to increase again to 2.8 MMTPA in 2021-22, which would continue. This deficit would be met by import of LPG through coastal receipts at Ennore, Vizag, Mangalore and Kochi ports.

1.3 Presently, IOC operates 11 LPG bottling plants in Tamil Nadu viz. Ennore, Erode, Ilayangudi, Madurai, Mannargudi, Mayiladuthurai, Salem, Trichy, Chengalpet, Coimbatore and CPCL Chennai and 1 plant at Pondicherry.

1.4 M/s IndianOil Petronas Private Ltd. (IPPL), a Joint Venture of IOC and Petronas, Malaysia have set up a LPG import terminal at Ennore, primarily to meet the deficit of LPG in Tamil Nadu. The terminal has been commissioned and is in operation since August 2012, handling about 100 TMT of LPG per month. It presently supplies LPG to IOC’s bottling plants at Ennore, Ilayangudi, Trichy and Madurai in Tamil Nadu by road tankers.

1.5 CPCL has monthly output of about 33 TMT of LPG, out of which IOC’s share is about 28 TMT. This LPG is predominantly used for meeting non-domestic requirement of all bottling plants in Tamil Nadu, Cuddapah bottling plant in A.P. and about 50% requirement of Devanagonthi bottling plant in Karnataka. Requirement of CPCL’s

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( i ) bottling plant at Chennai is also met by CPCL refinery. Requirement of domestic LPG in Tamil Nadu, Cuddapah and part requirement of Devanagonthi is met from LPG import terminal at Ennore by road tankers.

1.6 As these bottling plants are situated at considerable distance from Ennore, an optimisation study was carried out in 2011, which indicated that there would be considerable savings if a LPG pipeline system was put in place from Ennore to Trichy via Chengalpet and Pondicherry to substitute the road movement of LPG ex- Chennai/Ennore to the bottling plants in Tamil Nadu and Pondicherry. Further, nodal movement from Trichy was envisaged to reduce road movement to other bottling plants in Tamil Nadu. LPG sourcing for bottling plants in other states of south India would continue from the existing sources at Ennore, Mangalore, Vizag and the proposed import terminal at Kochi.

1.7 Vide Agenda Item No. P/224 dated 23.4.2012, Board had accorded first-stage approval to the proposal of laying a pipeline from Ennore to Trichy for transportation of LPG and had approved an amount of Rs.5 crore for carrying out pre-project activities, so as to facilitate preparation of Detailed Feasibility Report (DFR) for the proposal. The Board had also advised to carry out study of various alternatives of pipeline connectivity to more bottling plants in Tamil Nadu.

1.8 Subsequent to the first-stage approval, survey of the pipeline route has been completed and optimisation has been carried out for different pipeline configurations so as to arrive at the optimum configuration. Details are as under.

1.9 Analysis of Alternatives

1.9.1 To start with, assumptions considered for optimization study carried out in April 2011 for formulation of feasibility report (FR) were revisited. It emerged that, with materialization of Kochi LPG terminal proposal, which was not considered at the time of preparation of FR, there might be some impact on the throughput of the proposed pipeline. Accordingly, optimization study was carried out again in September 2012, considering LPG import facilities to be available at Kochi by 2016-17. The proposal for Kochi LPG import terminal was subsequently approved by the Board in December 2012.

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( ii ) 1.9.2 Findings of the optimization study of September 2012 were as under.

Scenario Delivery locations directly Projected Throughput and Savings linked with Pipeline 2016-17 2021-22 1. 3 (Chengalpet, Pondicherry, 494 TMT 755 TMT Trichy) Rs.64 crore Rs.117 crore 2. 4 (Chengalpet, Pondicherry, 494 TMT 755 TMT Trichy, Madurai) Rs.73 crore Rs.130 crore 3. 4 (Chengalpet, Pondicherry, 494 TMT 755 TMT Trichy, Salem) Rs.74 crore Rs.132 crore 4. 5 (Chengalpet, Pondicherry, 494 TMT 755 TMT Trichy, Madurai, Salem) Rs.82 crore Rs.146 crore 5. 6 (Chengalpet, Pondicherry, 494 TMT 755 TMT Trichy, Salem, Erode and Rs.78 crore Rs.153 crore Coimbatore) 6. 7 (Chengalpet, Pondicherry, 494 TMT 755 TMT Trichy, Madurai, Salem, Erode Rs.82 crore Rs.165 crore and Coimbatore)

From the above details, it emerged that throughput of the pipeline would remain the same in any combination of linked bottling plants.

1.9.3 Preliminary analysis of various alternatives was then carried out and the two best options were short-listed for preparation of the detailed scheme and cost estimates, manpower assessment and financial analysis etc. Results of the analysis were as under.

Scenario Length Operating Capex Opex RoI Rank based (km) Manpower (Rs. crore) (Rs. lakh) (15 years) on Financial Attractiveness 1. 494 64 581 30 12.9 1 2. 615 78 719 36 11.1 2 3. 620 92 736 37 10.7 3 4. 742 102 873 42 9.7 4 5. 810 120 948 47 8.6 5 6. 932 130 1068 51 6.4 6

1.9.4 This study concluded that Ennore-Trichy pipeline and Ennore-Trichy-Madurai pipeline would be the two financially most attractive pipeline configurations.

1.9.5 Based on the above analysis, CO(Optimisation) undertook another study in January 2013, considering updated demand numbers for working out throughput and savings for the said two pipeline configurations. The study considered all-India supply-demand scenario for IOC in 2016-17 and 2021-22. Findings of the study were as under.

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( iii ) Throughput Savings Pipeline Configuration (TMT) (Rs.crore) 2016-17 2021-22 2016-17 2021-22 Ennore-Trichy Pipeline 617 809 92.9 154.5 Ennore-Trichy-Madurai Pipeline 617 809 103.5 169.9

It can be noted that throughput projection and savings for both 2016-17 and 2021-22 have improved from earlier workings in both pipeline configurations. 1.9.6 IOC already has a petroleum product pipeline from Chennai to Madurai due to which right-of-way (RoW) up to Madurai is already available. Therefore, considering availability of most of the right-of-way up to Madurai and marginal difference in RoI for pipeline up to Trichy vis-à-vis pipeline up to Madurai, it was considered prudent to undertake detailed feasibility study for laying the pipeline up to Madurai. The DFR has been prepared accordingly. 1.10 The DFR broadly deals with the need and justification, system configuration, cost, viability, implementation methodology and allied details in respect of the proposed pipeline from Ennore to Madurai via Trichy. The pipeline would originate at Ennore import terminal and terminate at the existing Madurai bottling plant, providing pipeline connectivity en route to the existing LPG bottling plants at Chengalpet, Pondicherry and Trichy.

2.0 NEED AND JUSTIFICATION 2.1 The demand of LPG in south India in 2011-12 was about 4.5 MMTPA. As per the latest LPG supply-demand workings by Marketing Division, LPG demand of Industry for south India is projected as under. Fig. in MMT Year 2016-17 2018-19 2021-22 South India Demand 6.4 6.8 7.3

2.2 Considering actual demand of previous year, projected growth rate in the demand and supply scenario, CO(Optimisation) has carried out optimization study for proposed Ennore-Trichy-Madurai LPG pipeline for 2016-17 and 2021-22. The study projects throughput of 617 TMT in 2016-17 and 809 TMT in 2011 for the pipeline and substantial savings in logistics cost.

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( iv ) 2.3 At present, CPCL refinery is producing about 33 TMT of LPG per month. CPCL’s LPG is primarily used for bottling plant at Chennai, non-domestic requirement of bottling plants in Tamil Nadu, Cuddapah in A.P. and partial requirement of Devanagonthi bottling plants. 2.4 Most of domestic requirement of LPG at IOC’s bottling plants in Tamil Nadu, Cuddapah in A.P. and partial requirement of Devanagonthi is met from LPG import terminal at Ennore by Road Tankers.

2.6 Throughput Projections

2.6.1 The supply and distribution plans of LPG for various bottling plants linked to the proposed pipeline, for 2016-17 and 2021-22, have been projected to be as under.

Fig. in TMT Supply Distribution 2016-17 2021-22 2016-17 2021-22 Ennore 617 809 Chengalpet 138 180 port Pondicherry 43 44 Trichy 273 385 Madurai 163 200

Nodal movement from Trichy (134) (235) - Salem 101 112 - Erode 3 81 - Coimbatore 30 42 Nodal movement from Madurai (24) (50) - Ilayangudi 18 43 - Tirunelveli 6 7

Bottling Plant at Trichy 139 150 Bottling Plant at Madurai 139 150 Total 617 809

2.6.2 It may be seen from the above table that out of the projected throughput of 617 TMT for 2016-17, about 134 TMT and 24 TMT of LPG would be transported through road from Trichy and Madurai respectively. Similarly, out of the projected throughput of 809 TMT

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( v ) for 2021-22, about 235 TMT and 50 TMT of LPG would be transported through road from Trichy and Madurai respectively. 2.7 The long-term projected throughput for the pipeline would be as under. For working out projected demand beyond 2021-22, growth rate of 1.76% has been considered, as assessed by the Planning Cell of Marketing Division. As the pipeline would originate from Ennore import terminal, the additional demand would be met by increasing the imports.

Throughput Projections (TMT) 2016-17 2021-22 2026-27 617 809 883

2.8 It is pertinent to mention here that while some of the bottling plant capacities are projected to be saturated during 2016-17, the demand in attached markets would continue to increase. Therefore, it would be required to either stretch the capacities of the existing plants or set up new bottling plants in and around the existing markets to meet the increased LPG demand as required. Therefore, the pipeline facilities have been designed considering long-term demand projections.

2.9 For facilitating nodal movement to linked bottling plants from Trichy and Madurai, the existing unloading bays would be converted to loading bays.

2.10 The transportation requirement of LPG volumes indicated in para 2.7 can be met by the following alternative modes.

a) By Road

b) By Pipeline

Railway has not been considered as a feasible transportation option for LPG as the existing bottling plants do not have rail linkage.

2.11 It has been established the world over that pipelines are superior means for transportation of petroleum products compared to other modes viz. rail, road, tankers etc. due to their inherent advantages like reliability, economy, safety, flexibility, low energy consumption, low transit losses and negligible impact on environment. Construction of new pipelines provides relief to other modes of transportation for movement of essential commodities and passengers.

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( vi ) 2.12 In view of the above, it is proposed to lay Ennore-Trichy-Madurai LPG pipeline for transportation of LPG from Ennore to the LPG bottling plants at Chengalpet, Pondicherry, Trichy and Madurai. The proposed pipeline would realign movement of LPG for certain other bottling plants viz. Salem, Coimbatore, Erode, Ilayangudi and Tirunalveli from Trichy and Madurai in place of the present practice of movement from Ennore. Thus, the proposed pipeline would considerably reduce distances involved in road movements and thereby, logistics cost.

3.0 Design Capacity

3.1 Taking into account findings of the optimization study and the requirements of linked bottling plants, it is proposed to design the proposed LPG pipeline from Ennore to Madurai for a capacity of 0.9 MMTPA.

4.0 Project Description 4.1 Pipeline Route 4.1.1 The proposed pipeline would originate at IPPL’s LPG import facilities at Ennore and would follow an independent route for approximately 30 km, where it would meet the existing right-of-way (RoW) of Chennai-Trichy-Madurai Pipeline (CTMPL) at its chainage 27.4 km. Thereafter, the pipeline would follow the RoW of CTMPL up to Madurai via Asanur except for about 5.3 km detour for linking Chengalpet bottling plant, about 55 km to Pondicherry bottling plant and about 19 km to Trichy. The pipeline, after leaving CTMPL RoW near Madurai delivery station of CTMPL, would further follow an independent route for about 28 km to reach the bottling plant at Madurai.

4.2 System Configuration 4.2.1 Configuration of the pipeline system broadly comprises the following.

 Total length: 615 km

 419 km long, 10.75” OD x 0.25” WT pipeline section from Ennore to T-Point location for Trichy bottling plant

 55 km long, 8.625” OD x 0.25” WT branch pipeline from T-point to Pondicherry and 19 km long, 8.625” OD x 0.25” WT branch pipeline from T- point to Trichy

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( vii )  122 km long, 8.625” OD x 0.25” WT, branch pipeline from T-point location for Trichy to Madurai

 2 booster pumps and 3 motor-driven mainline pumping units with variable frequency drive at Ennore  Scraper facilities at T-point locations for branches to Pondicherry and Trichy bottling plants  Delivery facilities at Chengalpet, Pondicherry, Trichy and Madurai 4.3 Operation Philosophy 4.3.1 Operation of the pipeline would predominantly be through heart-cut mode. 4.4 Implementation Methodology 4.4.1 It is proposed to take up execution of the project through in-house expertise. 4.5 Statutory Clearances 4.5.1 Suitable actions will be taken for obtaining MoE&F clearance and other statutory clearances for the proposed pipeline from concerned authorities, as applicable. 4.6 Construction Schedule 4.6.1 The proposed scheme is expected to be completed in a period of about 30 months after receipt of statutory clearances. 4.7 Manpower Requirement 4.7.1 The manpower requirement would be about 82 during construction phase and about 76 for operation of the pipeline, excluding Line Patrolmen (LPM). The requirement of LPM for the new portion of right-of-way is envisaged to be outsourced. 5.0 Capital Cost 5.1 The pipeline system from Ennore to Madurai is estimated to cost Rs.711 crore, including a foreign exchange component of Rs.202 crore, at December 2012 price level. This includes Rs.60 lakh required for modifications in unloading bays at Trichy and Madurai bottling plants for their use as loading bays. 5.2 The cost estimates have been prepared on conservative basis without considering benefits under EPCG (Export Promotion Capital Goods) scheme. 6.0 Operating Cost 6.1 Operating cost of the pipeline system includes the cost of power for mainline pumping units, utilities, consumables, salaries and wages, administrative overheads, repair and

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( viii ) maintenance etc. The operating cost corresponding to throughput of 0.9 MMTPA is estimated to be about Rs.30 crore per annum at December 2012 price level.

7.0 Financial Analysis

7.1 Capital cost of the project is considered to be financed through internal resources/commercial borrowings. For the purpose of financial analysis, debt:equity ratio of 1:1 has been considered, with interest @ 10.75% per annum and repayment in 8 equal annual installments, with one-year moratorium from the date of commissioning. Requirement of working capital will be met through internal resources.

7.2 Financial analysis for the proposed pipeline system has been carried out taking into account the following.  Capital cost of the pipeline and its operation for 15 years / 25 years  Throughput as indicated in the optimization study for 2016-17 and 2021-22  Corporate savings assessed in the optimization study, as revenue  Benefit due to lower transit loss in pipeline transportation compared to losses permitted for transportation through road tankers  Savings in loading and decanting charges associated with road tankers on notional basis Results of the financial analysis are as under.

15 years’ Operation 25 years’ Operation RoI (%) 16.2 17.5 RoE (%) 19.8 21.1

7.3 Sensitivity analysis has also been carried out, the results of which are as under.

15 years’ Operation 25 years’ Operation Case RoI (%) RoE (%) RoI (%) RoE (%) Increase in capital cost by 10% 14.8 17.6 16.2 19.1

Increase in operating cost by 10% 16.0 19.4 17.3 20.7

Decrease in throughput by 10% 14.2 16.8 15.8 18.5

All the above together 12.6 14.3 14.3 16.3

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( ix ) 7.4 Economics of Ennore-Trichy Pipeline 7.4.1 Sensitivity analysis has also been carried out considering termination of the pipeline at Trichy itself. The return on investment improves marginally in this case.

15 years’ Operation 25 years’ Operation RoI (%) 18.0 19.2 RoE (%) 22.1 23.2

8.0 Conclusions and Recommendations

8.1 Most of the LPG bottling plants in Tamil Nadu are situated at considerable distance from Ennore. Optimization study indicates that there would be considerable savings by laying a LPG pipeline from Ennore to Madurai via Chengalpet, Pondicherry and Trichy, which would substitute road movement of LPG ex-Ennore to these bottling plants.

8.2 Results of the financial analysis indicate that the proposed pipeline is viable under most of the scenarios considering the prevailing hurdle rate of 13%. The pipeline will facilitate cost-effective transportation of LPG from Ennore to different bottling plants in Tamil Nadu and one plant at Pondicherry.

8.3 IOC intends to lay several LPG pipelines to provide connectivity to its major LPG bottling plants. With commissioning of LPG import terminal at Ennore and implementation of Kochi terminal, potential exists to lay new LPG pipelines from these two sources and formation of a LPG grid in south India in future. It would, therefore, be prudent to lay the proposed Ennore-Trichy-Madurai LPG pipeline for providing pipeline connectivity to all major bottling plants en route. Providing pipeline connectivity to other major bottling plants in Tamil Nadu viz. Coimbatore, Salem and Erode could be examined at a later stage.

8.4 Keeping the above in view, it is recommended to lay Ennore-Trichy-Madurai LPG pipeline at an estimated cost of Rs.711 crore, including a foreign exchange component of Rs.202 crore, at December 2012 price level. This includes cost of modifications in Marketing facilities at Trichy and Madurai at an estimated cost of Rs.60 lakh.

***

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( x ) CHAPTER – I

1.0 INTRODUCTION 1.1 India is deficit in Liquefied Petroleum Gas (LPG). Industry imports LPG to the tune of 5 MMTPA to meet the domestic demand. South India, comprising Andhra Pradesh (A.P.), Karnataka, Kerala and Tamil Nadu, is also deficit in LPG.

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requirement of Devanagonthi bottling plant in Karnataka. Requirement of CPCL’s bottling plant at Chennai is also met by CPCL refinery. Requirement of domestic LPG in Tamil Nadu, Cuddapah and part requirement of Devanagonthi is met from LPG import terminal at Ennore by road tankers.

1.8 Subsequent to the first-stage approval, survey of the pipeline route has been completed. Based on the optimisation study for different pipeline configurations, preliminary analysis of various alternatives was carried out and the two best options were short-listed for preparation of the detailed scheme and cost estimates, manpower assessment and financial analysis etc. This study concluded that Ennore-Trichy pipeline and Ennore-Trichy-Madurai pipeline would be the two financially most attractive pipeline configurations. The study has been covered in details in Chapter-II.

1.9 Based on the above analysis, CO(Optimisation) undertook another study in January 2013, considering updated demand numbers for working out throughput and savings for the two pipeline configuration i.e. Ennore-Trichy pipeline and Ennore-Trichy- Madurai pipeline. IOC already has a petroleum product pipeline from Chennai to Madurai due to which right-of-way (RoW) up to Madurai is already available. Therefore, considering availability of most of the right-of-way up to Madurai and

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marginal difference in Return-on-Investment (RoI) for pipeline up to Trichy vis-à-vis pipeline up to Madurai, it is considered prudent to undertake detailed feasibility study including viability study for laying the pipeline up to Madurai. The DFR has been prepared accordingly.

1.10 The DFR broadly deals with the need and justification, system configuration, cost, viability, implementation methodology and allied details in respect of the proposed pipeline from Ennore to Madurai via Trichy. The pipeline would originate at Ennore import terminal and terminate at the existing Madurai bottling plant, providing pipeline connectivity en route to the existing LPG bottling plants at Chengalpet, Pondicherry and Trichy.

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CHAPTER - II

2.0 ANALYSIS OF ALTERNATIVES

2.1 While analyzing the proposal seeking first-stage approval for Ennore-Trichy LPG pipeline, a view emerged that options be explored for minimizing nodal movement through road tankers and, instead, feeding additional bottling plants in the region through the pipeline itself. Accordingly, a preliminary feasibility study was carried out for linking the proposed Ennore-Trichy LPG pipeline with 6 major bottling plants in Tamil Nadu viz. Chengalpet, Trichy, Madurai, Salem, Erode and Coimbatore and one at Pondicherry. The study indicated that Ennore-Trichy pipeline configuration was financially most attractive among various pipeline alternatives.

2.2 Accordingly, IOC Board accorded first-stage approval to the proposal of laying a pipeline from Ennore up to Trichy for transportation of LPG and sanctioned an amount of Rs.5 crore for carrying out pre-project activities, so as to facilitate preparation of Detailed Feasibility Report (DFR) for the proposal. At the same time, Board also advised to carry out study of various alternatives for connectivity of more bottling plants in Tamil Nadu.

2.3 In the mean time, a proposal for LPG terminal at Kochi proposal was revived, and was approved by the Board in December 2012. This development was a major change in the basic premises considered for preparation of Ennore-Trichy LPG pipeline proposal, as feasibility report of Ennore-Trichy pipeline was based on the optimization study considering without LPG import facilities at Kochi. Approval of the proposed LPG import facilities at Kochi mandated fresh optimization study for the proposed pipeline. Accordingly, an optimization study was carried out in September 2012, considering import facilities at Kochi functional by 2016-17.

2.4 Findings of the optimization study of September 2012 were as under.

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Scenario Delivery locations directly Projected Throughput and Savings linked with Pipeline 2016-17 2021-22

1. 3 (Chengalpet, Pondicherry, 494 TMT 755 TMT Trichy) Rs.64 crore Rs.117 crore

2. 4 (Chengalpet, Pondicherry, 494 TMT 755 TMT Trichy, Madurai) Rs.73 crore Rs.130 crore

3. 4 (Chengalpet, Pondicherry, 494 TMT 755 TMT Trichy, Salem) Rs.74 crore Rs.132 crore

4. 5 (Chengalpet, Pondicherry, 494 TMT 755 TMT Trichy, Madurai, Salem) Rs.82 crore Rs.146 crore

5. 6 (Chengalpet, Pondicherry, 494 TMT 755 TMT Trichy, Salem, Erode and Rs.78 crore Rs.153 crore Coimbatore)

6. 7 (Chengalpet, Pondicherry, 494 TMT 755 TMT Trichy, Madurai, Salem, Rs.82 crore Rs.165 crore Erode and Coimbatore)

From the above details, it emerged that throughput of the pipeline would remain the same in any combination of linked bottling plants. 2.5 Preliminary analysis of various alternatives was then carried out and the two best options were short-listed for preparation of the detailed scheme and cost estimates, manpower assessment and financial analysis etc.

Findings of the study were as under.

Scenario Length Operating Capex Opex RoI Ranking (km) Manpower (Rs. crore) (Rs. lakh) (15 years) based on Financial Attractiveness 1. 494 64 581 30 12.9 1

2. 615 78 719 36 11.1 2

3. 620 92 736 37 10.7 3

4. 742 102 873 42 9.7 4

5. 810 120 948 47 8.6 5

6. 932 130 1068 51 6.4 6

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2.6 This study concluded that Ennore-Trichy pipeline and Ennore-Trichy-Madurai pipeline would be the two financially most attractive pipeline configurations.

2.7 Based on the above analysis, CO(Optimisation) undertook another study in January 2013, considering updated demand numbers for working out throughput and savings for the said two pipeline configurations. Summary Report of this study is given in Attachment 2.1.

2.8 Considering availability of most of the right-of-way up to Madurai and marginal difference in return on investment (RoI) for pipeline up to Trichy vis-à-vis pipeline up to Madurai, it was considered prudent to undertake proposal for laying the pipeline up to Madurai.

2.9 Accordingly, the DFR has been prepared for 615 km long Ennore-Trichy-Madurai LPG pipeline.

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CHAPTER - III

3.0 NEED AND JUSTIFICATION 3.1 The demand of LPG in south India in 2011-12 was about 4.5 MMTPA. As per the latest LPG supply-demand workings by Marketing Division, LPG demand of Industry for south India is projected as under.

Fig. in MMT Year 2016-17 2018-19 21-22 South India Demand 6.4 6.8 7.3

3.2 Considering actual demand of previous year, projected growth rate in the demand and supply scenario, CO(Optimisation) has carried out optimization study for proposed Ennore-Trichy-Madurai LPG pipeline for 2016-17 and 2021-22. This study projects throughput of 617 TMT in 2016-17 and 809 TMT in 2021-22 for the pipeline and substantial savings in logistics cost for transportation of LPG. The financial analysis of laying own LPG pipeline vis-à-vis use of alternate mode i.e. road has been covered in details in Chapter-VIII.

3.3 At present, CPCL refinery is producing about 33 TMT of LPG per month. CPCL’s LPG is primarily used for bottling plant at Chennai, non-domestic requirement of bottling plants in Tamil Nadu, Cuddapah in A.P. and partial requirement of Devanagonthi bottling plants. 3.4 Most of domestic requirement of LPG at IOC’s bottling plants in Tamil Nadu, Cuddapah in A.P. and partial requirement of Devanagonthi is met from LPG import terminal at Ennore by Road Tankers.

3.5 Throughput Projections

3.5.1 The supply and distribution plans of LPG for various bottling plants linked to the proposed pipeline, for 2016-17 and 2021-22, have been projected to be as under.

Fig. in TMT Supply Distribution 2016-17 2021-22 2016-17 2021-22 Ennore port 617 809 Chengalpet 138 180

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Supply Distribution 2016-17 2021-22 2016-17 2021-22 Ennore port Pondicherry 43 44 Trichy 273 385 Madurai 163 200

Nodal movement from Trichy (134) (235) - Salem 101 112 - Erode 3 81 - Coimbatore 30 42 Nodal movement from (24) (50) Madurai - Ilayangudi 18 43 - Tirunelveli 6 7

Bottling Plant at Trichy 139 150 Bottling Plant at Madurai 139 150 Total 617 809

3.5.2 It may be seen from the above table that out of the projected throughput of 617 TMT for 2016-17, about 134 TMT and 24 TMT of LPG would be transported through road from Trichy and Madurai respectively. Similarly, out of the projected throughput of 809 TMT for 2021-22, about 235 TMT and 50 TMT of LPG would be transported through road from Trichy and Madurai respectively. Schematic presentations of section-wise projected throughput and nodal movements for 2016-17 and 2021-22 are given at Attachment 3.1 and 3.2. 3.6 The long-term projected throughput for the pipeline would be as under. For working out projected demand beyond 2021-22, growth rate of 1.76% has been considered, as assessed by the Planning Cell of Marketing Division. As the pipeline would originate from Ennore import terminal, the additional demand would be met by increasing the imports.

Throughput Projections (TMT) 2016-17 2021-22 2026-27 617 720 786

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3.7 It is pertinent to mention here that while some of the bottling plant capacities are projected to be saturated during 2016-17, the demand in attached markets would continue to increase. Therefore, it would be required to either stretch the capacities of the existing plants or set up new bottling plants in and around the existing markets to meet the increased LPG demand as required. Therefore, the pipeline facilities have been designed considering long-term demand projections.

3.8 For facilitating nodal movement to linked bottling plants from Trichy and Madurai, the existing unloading bays would be converted to loading bays.

3.9 The transportation requirement of LPG volumes indicated in para 3.6 can be met by the following alternative modes.

a) By Road

b) By Pipeline

Railway has not been considered as a feasible transportation option for LPG as the existing bottling plants do not have rail linkage.

3.10 It has been established the world over that pipelines are superior means for transportation of petroleum products compared to other modes viz. rail, road, tankers etc. due to their inherent advantages like reliability, economy, safety, flexibility, low energy consumption, low transit losses and negligible impact on environment. Construction of new pipelines provides relief to other modes of transportation for movement of essential commodities and passengers.

3.11 In view of the above, it is proposed to lay Ennore-Trichy-Madurai LPG pipeline for transportation of LPG from Ennore to the LPG bottling plants at Chengalpet, Pondicherry, Trichy and Madurai. The proposed pipeline would realign movement of LPG for certain other bottling plants viz. Salem, Coimbatore, Erode, Ilayangudi and Tirunelveli from Trichy and Madurai in place of Ennore. Thus, the proposed pipeline would considerably reduce distances involved in road movements and thereby, logistics cost.

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Attachment 3.1

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Attachment 3.2

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CHAPTER - IV

4.0 DESIGN PHILOSOPHY 4.1 Introduction

4.1.1 This chapter covers the basic data and design parameters adopted for preparing this report.

4.2 Products to be handled

4.2.1 The proposed Ennore-Trichy-Madurai LPG pipeline is envisaged to be used for transportation of LPG.

4.3 Product Characteristics

4.3.1 The pipeline system has been designed on the basis of the following characteristics of LPG.

Specific Gravity : 0.54

Kinematic Viscosity : 0.29 cst

4.4 Design Capacity

4.4.1 The pipeline has been designed for a capacity of 0.9 MMTPA under heart-cut operation philosophy.

However, it would be possible to stretch the capacity up to 0.95 MMTPA with existing facilities to take care of seasonal variations in demand.

4.5 Design Parameters

4.5.1 For mainline as well as station piping, a weld joint factor of 1.00 (one) has been considered.

4.5.2 Maximum allowable operating pressure (MAOP) of the system is based on 72% of the specified minimum yield strength of the pipe material.

4.5.3 The pipeline system has been designed considering round the clock operation on three- shifts a day basis.

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4.5.4 No corrosion allowance has been considered in the wall thickness of the pipe, as effective corrosion mitigation measures would be provided in the system.

4.5.5 Pipes of higher wall thickness are envisaged to be laid across major rivers, water courses etc. At rail and road crossings, where casing pipe would be provided, the pipe wall thickness would remain same as that for the main pipeline.

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CHAPTER-V

5.0 PROJECT DESCRIPTION

5.1 Introduction

5.1.1 This chapter broadly deals with various features of the project viz. pipeline sizing, pipeline route, system configuration, facilities required, cathodic protection, telecommunication & telesupervisory system, implementation methodology, construction schedule etc. for laying a LPG pipeline from Ennore to Madurai.

5.2 Pipeline Size Optimization

5.2.1 Different alternative pipe sizes have been considered for the pipeline system. The alternatives have been compared on the basis of the present value of costs, worked out at 13% rate of discount, over 15 years of operation. Results of the study indicate that the pipeline system using 10.75” OD x 0.25” WT for Ennore-Trichy section; 8.625” OD x 0.25” WT for Trichy-Madurai and branches to Pondicherry and Trichy of 8.625” OD x 0.25” WT would be the optimum pipeline configuration for given projected throughput.

5.3 Hydraulics and System Configuration

5.3.1 Based on the pipeline throughput requirements, hydraulic details have been worked out. Details are as under.

Length (km) : 615 km

Section wise Capacity (MMTPA) / Flow Rate (kl/hr)

Ennore to Chengalpet : 0.90 (208 kl/hr)

Chengalpet to T-Point for Pondichérry : 0.80 (185 kl/hr)

Pondichérry T-Point to T-Point for Trichy : 0.70 (162 kl/hr)

T-Point for Trichy to Madurai : 0.30 (69 kl/hr)

Branch to Pondicherry : 0.10 (23 kl/hr)

Branch to Trichy : 0.45 (104 kl/hr)

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Line Size /MAOP Line Size MAOP Section OD (inch) Dia (inch) Grade (mcl) (Kg/cm2) Ennore- T Point for Trichy 10.75 0.25 API-5L X52 2267 122 T Point for Trichy to Madurai Branch to Pondicherry BP 8.625 0.25 API-5L X46 2500 135 Branch to Trichy BP

Hydraulics (Considering simultaneous heart cut delivery at all ToPs)

No. of Chainage(#) Altitude SDH RH S. Station Pumping (km) (m) (mcl) (mcl) No. Units 1. Ennore 0 2 1723 - (2+1) 2. Chengalpet 125 22 - 1270 - 3. Pondicherry TP 226 64 - 946 - 4. Trichy TP 419 128 - 464 - 5. Madurai 541 204 - 222 - Pondicherry BP 55 ex-TP 12 - 988# - Trichy BP 19 ex-TP 113 - 423# -

km: Kilometre, m: Metre, mcl: Metre Column of Liquid(LPG), SDH: Station Discharge Head, RH: Residual Head

# Actual RH before pressure control valve. To be brought down to 222 mcl for delivery. Hydraulic gradient is placed at Annexure-I.

5.4 System requirements

5.4.1 Configuration of the pipeline system broadly comprises the following.

 Total length: 615 km

 419 km long, 10.75” OD x 0.25” WT pipeline section from Ennore to T-Point location for Trichy bottling plant

 55 km long, 8.625” OD x 0.25” WT branch pipeline from T-point to Pondicherry and 19 km long, 8.625” OD x 0.25” WT branch pipeline from T- point to Trichy

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 122 km long, 8.625” OD x 0.25” WT, branch pipeline from T-point location for Trichy to Madurai

 2 booster pumps and 3 motor-driven mainline pumping units with variable frequency drive at Ennore

 Scraper facilities at T-point locations for branches to Pondicherry and Trichy bottling plants

 Delivery facilities at Chengalpet, Pondicherry, Trichy and Madurai

Schematic flow diagram of the pipeline system is given in Annexure-II.

5.5 Pipeline route

5.5.1 The proposed pipeline would originate at IPPL’s LPG import facilities at Ennore and would follow an independent route for approximately 30 km, where it would meet the existing RoW of Chennai-Trichy-Madurai Pipeline (CTMPL) at its chainage 27.4 km. Thereafter, the pipeline would follow the RoW of CTMPL up to Madurai via Asanur except for about 5.3 km detour for linking Chengalpet bottling plant, about 55 km to Pondicherry bottling plant and about 19 km to Trichy. The pipeline, after leaving CTMPL RoW near Madurai delivery station of CTMPL, would further follow an independent route for about 28 km to reach the bottling plant at Madurai. An indicative route map is enclosed as Annexure-III.

5.5.2 The terrain along the pipeline route is mostly flat and plain with agricultural and paddy field, which also includes stretches of rocky terrain and low lying area in between. The pipeline would be provided with motor operated sectionalisation valves (SVs) at regular intervals all along the pipeline route including providing additional motor operated SVs at both sides of each major river/ canal crossings. These mainline SVs would be provided as per the provisions of OISD-214.

5.5.3 The pipeline would cross a number of rivers, canals, nallas, roads and railway tracks. The pipeline across major perennial rivers/canals are proposed to be installed by using Horizontal Directional Drilling (HDD) technique, whereas across minor rivers/ canals, pipeline would be laid by submerged crossing method. Provision has also been kept for installing pipeline by HDD technique across selected National/ State Highways. Pipeline across railway crossings and selected National/State Highways would be laid by using bored cased crossing method.

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5.6 Pump Station and Facilities 5.6.1 Civil 5.6.1.1 Civil structures are envisaged to be erected at the stations to provide shelter to men and machinery. Pump shed and booster shed to accommodate the pumping units with associated facilities have been planned to be of steel structure. The civil structures would also be provided to house control panels, MCC panels, HT/LT panels, batteries, etc. All the safety factors like wind load, seismic load, soil bearing capacity etc. would be taken into account while designing the civil structures. Facilities such as pump shed, control building, HT/LT panel rooms, VFD room, workshop, stores, watchman cabin, etc. have been envisaged at Ennore pump station, whereas facilities like control building, MCC building, workshop, store, watchman cabin, etc. have been envisaged at each LPG delivery station locations. 5.6.1.2 Provision of land acquisition/ purchase has been kept for T-Point locations and for new RCP/ SV stations along the mainline route.

5.6.2 Cathodic protection system 5.6.2.1 Temporary Cathodic Protection system with the requisite design life is envisaged during the construction phase using the Mg anodes in line with OISD guidelines. To mitigate the external corrosion of mainline, impressed current cathodic protection system shall be provided. The system envisages impressed current anodes with AC/AC cum DC operated cathodic protection inputs having uninterrupted power supply arrangement.

5.6.3 Mechanical 5.6.3.1 Motor driven mainline pumping units (MLPUs) having variable frequency drive (VFD) and horizontal spilt case centrifugal pump shall be installed at Ennore pumping station with 2+1 (2 running and 1 standby) combination. Provision has been kept for booster pumps at Ennore. 5.6.3.2 Piping system shall be designed as per ASME B 31.4 standard. Pipes, pipe fittings, flanges etc. will conform to International Standards such as API 5L, ASTM A 106 Grade B / A333 Gr-6, ANSI B-16.5, ANSI B-16.25, WPB-234, MSS-SP-44, MSS-SP- 75 etc. and will be suitable for ANSI-600 and ANSI 300 pressure classes. Gate valves, ball valves, swing check valves will conform to API 6D standards. Electric motor actuators of suitable power ratings will be installed for the operation of valves. Pigging facilities have been considered.

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5.6.4 Fire Fighting System 5.6.4.1 Fire detection & alarm system: For the Control building, smoke detectors and rate of rise (RoR) heat detectors along with Fire Alarm Panel and SIL-3 rated PLC with HMI have been considered for all attended stations. For Pump house, Ultra Violet/ Infrared flame detectors, RoR heat detectors have been considered. HC detectors and smoke detectors have been considered for all RCPs and T-points.

5.6.4.2 Fire Suppression system: Besides portable Fire extinguishers, CO2 flooding would be provided in cable trenches, hydrants. Water monitors would be provided suitably in the piping area. The numbers and type of extinguisher would be in line with OISD 214. The piping would be hooked with IPPL fire water network at Ennore to meet any exigency requirement. Firewater network (with required number of Water monitors and hydrants with double landing valves) would be provided at LPG delivery locations and the same would be hooked with marketing fire water network at all the exiting bottling plants. Gas Monitoring System has been considered for MLPU and piping area. Medium Velocity Water Sprinkler system considered for MLPU and piping and metering and scrapper barrel area.

5.6.5 Electrical 5.6.5.1 The electrical system at Ennore would be designed for receiving power supply at 33 KV level through independent feeder from state electricity board/port authority. 33/6.6 KV, 6 MVA outdoor switchyard works have been envisaged for this purpose. The prime movers would be 6.6 KV Motors with AC Variable Speed Drive for energy saving during variable speed requirement. Ennore being the mother station, one 6.6 KV, 2 MVA HT DG Set has been considered for running the station in case of mains power failure. 5.6.5.2 Building lighting & air conditioning, HT & LT Panel with battery back-up and High Masts for outdoor lighting would be provided. All cabling would be XLPE insulated as per IS-7098. All lighting luminaries would be energy efficient and flame-proof certified for battery area. APFC Panel would also be provided to maintain power factor near unity. 5.6.5.3 At Chengalpet, Pondicherry, Trichy and Madurai, incoming grid supply has been considered at LT 415V level through Marketing installation connection. For back-up supply DG Set with Auto-Mains failure would be provided.

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5.6.6 Instrumentation and Station Control Centre

5.6.6.1 All stations would be provided with hot standby PLC based station control system to perform local control functioning and to monitor and report local conditions (except at block valves (BV) / river MOV locations / sectionalizing valve (SV) locations where non-redundant PLC / RTUs shall be provided). 5.6.6.2 The field instrumentation at all the attended stations would comprise pressure transmitters, pressure switches, pressure gauges, mass flow meters, temperature gauge, temperature transmitter, scraper detector, emergency shut down switches etc. 5.6.6.3 All SV locations would be provided with RTUs for operation of MOVs from MCS in case of exigencies. 5.6.6.4 Station Control Centre (SCC) would have workstations as operator interface to the station instrumentation and control system, on dual local area network (LAN) in client server mode. 5.6.6.5 230 V UPS system with dual battery back up (4 hours) would be provided at all the attended stations. 5.6.7 Telecommunication system 5.6.7.1 A dedicated state of the art OFC based, SDH communication system with 99.9% availability along with IP/E1 based new EPABX Systems at all attended stations. This would be over and above existing fibre of CTMPL (in common ROW stretch) serving as a mutual back-up medium for both the pipelines. 5.6.7.2 RTU data & CCTV requirements of SV locations all along the LPG pipeline shall be catered by extending the network connectivity using additional/ spare fibre from the nearest attended station. 5.6.7.3 Network management system has been considered for the SDH network at Ennore and Madurai. 5.6.7.4 Master Network Video Recorder (NVR) at Ennore with failover Network Video Recorder (NVR) at Trichy. The Control Centre for CCTV System with Network Video Recorder (NVR) (with client PC) shall be at all attended stations. 5.6.7.5 Dedicated power systems (Battery charger + battery bank), solar power system and electronic perimeter security system considered at all locations. 5.6.7.6 VHF System, consisting of one base Station with 4 hand-held sets for delivery stations and one base Station with 6 hand-held sets for pumping station at Ennore has been considered.

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5.6.8 Supervisory Control and Data Acquisition (SCADA) System

5.6.8.1 The telesupervisory system for the proposed pipeline is envisaged to have dual hot stand-by computer system in client-server mode for monitoring and control of pipeline from Master Control Station (MCS) envisaged at Ennore. In the event of failure of the duty machine, the hot stand-by machine will take over the role of the duty machine instantaneously, without affecting the operational continuity and loss of data, thereby ensuring high reliability of the system. The telesupervisory system will work in Master-Slave configuration, having its slave stations at attended stations and at block valve locations, installed along the entire pipeline network. The master station shall be interfaced with slave stations over OFC telecom system over Wide Area Network for data acquisition and control.

5.6.8.2 MCS at Ennore would be equipped with SCADA software running under multi- programming, multi-tasking real time operating system environment. The SCADA software would have features for control & monitoring of all locations including Block valves. Leak Detection system shall be provided and the Leak Detection Software shall run in a separate machine at MCS. This package will enable the operator to take optimal control actions and thus ensure the safety and security of the pipeline network.

Typical MCS, SCC, T-Point configurations and RTU configuration at RCP/SV are indicated in Annexure-IV(a) to IV(d).

5.7 Operation Philosophy

5.7.1 Operation of the pipeline would predominantly be through heart-cut mode.

5.8 Implementation Methodology

5.8.1 It is proposed to take up execution of the project through in-house expertise.

5.9 Statutory Clearances

5.9.1 Suitable actions will be taken for obtaining MoE&F clearance and other statutory clearances for the proposed pipeline from concerned authorities, as applicable.

5.10 Construction Schedule

5.10.1 The proposed scheme is expected to be completed in a period of about 30 months after receipt of statutory clearances. The schedule is shown in Annexure-V.

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5.11 Manpower Requirement

5.11.1 The manpower requirement would be about 82 during construction phase and about 76 for operation of the pipeline, excluding Line Patrolmen (LPM). The requirement of LPM for the new portion of right-of-way is envisaged to be outsourced.

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CHAPTER-VI

6.0 CAPITAL COST

6.1 The pipeline system from Ennore to Madurai is estimated to cost Rs.711 crore, including a foreign exchange component of Rs.202 crore, at December 2012 price level. This includes Rs.60 lakh required for modifications in unloading bays at Trichy and Madurai bottling plants for their use as loading bays.

6.2 The project cost for pipeline facilities has been estimated on the basis of the following.

 Cost actually incurred in the past with appropriate escalation  Establishing physical requirements, preliminary specifications and in-house cost data  Experience of virtually identical projects elsewhere to establish physical requirements and cost  Experience of slightly different projects adjusted approximately to establish physical requirements and budgetary quotations  Experience of similar projects in value/terms adjusted for price difference by past experience and escalation data

6.3 Survey and field engineering

6.3.1 This cost includes the cost of surveys, sub-soil investigation & field engineering.

6.4 Land acquisition, ROW and crop compensation

6.4.1 Land requirement for T-Point locations, SVs/RCPs etc. has been taken on the basis of permanent land acquisition. ROW compensation and crop compensation has been suitably considered.

6.4.2 Cost of colony has not been considered as the pumping stations/ delivery stations are envisaged near urban/ semi urban areas.

6.5 Project management & engineering, insurance 6.5.1 The proposed scheme is expected to be completed in a period of 30 months after receipt of statutory clearances. The cost of project management & engineering is estimated on the basis of this envisaged time schedule. The manpower requirement

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during construction phase would be about 82. However, it would be reviewed again before start of construction activities.

6.6 Mainline Pipes & Materials

6.6.1 The cost of pipe and coating has been considered as per the latest data available. The cost of mainline materials required such as casing pipe, coating and wrapping materials, valves etc. has been estimated on the basis of budgetary offers and cost actually incurred in recent past on similar items.

6.7 Mainline Construction

6.7.1 The cost of mainline construction has been estimated on the basis of the cost incurred in similar project executed elsewhere, suitably adjusted to bring it to December 2012 price level.

6.8 Pump Station and Terminal

6.8.1 The cost under this head includes the cost of mechanical, civil, electrical and instrumentation & control facilities which mainly comprise the mainline pumping units including prime movers, valves, scraper barrels, fire alarm & detection system, fire hydrant network & related facilities, Power-cum-Motor Control Center, PLC based control system, control buildings etc. including the erection and installation of requisite facilities.

For facilitating nodal movement to linked Bottling plants from Trichy and Madurai, the existing unloading bays would be utilized as loading bays.

6.9 Cathodic Protection

6.9.1 This includes the cost of materials required for temporary and permanent cathodic protection, installation & commissioning of equipment/materials, CP rectifier units, ground beds, cable etc. Estimates are based on budgetary offers and the rates from similar projects executed in the recent past.

6.10 Telecommunication and Telesupervisory System

6.10.1 Cost estimates are based on budgetary offers/earlier purchase orders, adjusted suitably.

6.11 Escalation

6.11.1 No provision has been made for price escalation during the period of execution of the project and, as far as possible, the estimates have been prepared on the basis of the costs

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prevalent in December 2012. However, provision for contingencies to the tune of 5% has been kept in the cost estimates, which is considered to be adequate to cover unforeseen factors.

Summary of capital cost is given in Attachment-6.1.

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Attachment-6.1

Ennore-Trichy-Madurai LPG Pipeline

Capital Cost

(December 2012 price level)

(Rs. in Lakh)

No. Description of Item FE Rupees Total A. Pipeline Facilities

1. Survey & Field Engineering 0 588 588 2. Land Acquisition, ROW & Crop 0 1309 1309* Compensation 3. Mainline Pipes 15890 6975 22865 4. Mainline Materials 534 405 939 5. Mainline Construction 0 12805 12805 6. Pump Station and Terminal 2783 13993 16776 7. Cathodic Protection 46 1210 1256 8. Telecommunication & Telesupervisory 0 4048 4048

Sub-total 19253 41333 60586

Contingencies 963 2067 3030

Project Management and 0 3817 3817 Engineering, Insurance

Interest During Construction 0 3602 3602

Total (Pipelines Facilities) 20216 50819 71035 B. Modifications in Marketing Facilities 0 60 60 Total (A+B) 20216 50879 71095 Say, Rs. crore 202 509 711

Exchange Rates: 1 US $ = Rs.54.61 *Including cost of land i.e. Rs.628 Lakh

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CHAPTER-VII

7.0 OPERATING COST 7.1 Operating cost of the pipeline system includes the cost of power for mainline pumping units, utilities, consumables, salaries and wages, administrative overheads, repair and maintenance etc.

The operating cost corresponding to throughput of 0.9 MMTPA is estimated to be about Rs.30 crore per annum at December 2012 price level.

Details of the operating cost are given in Attachment-7.1.

7.2 Basis of estimation

7.2.1 Fuel/Power (Electricity)

The project envisages motor driven pumping units at Ennore. For the purpose of operating cost calculations, tariff for electricity has been considered @ Rs.5.00 per unit.

7.2.2 Utilities

7.2.2.1 Power

Power is also required for operation of the auxiliaries & controls etc. and for illumination at the stations. Requirement of power is planned to be drawn from State Grid or by increasing contract demand of existing electricity connections at bottling plants, if required, and extending to pipeline facilities.

7.2.2.2 Water

There is no major requirement of water for operation of the pipeline system. Water for fire-fighting will be drawn from the Fire water network of existing facilities of Marketing.

7.2.3 Manpower

7.2.3.1 The cost towards salaries and wages shown against the labour component in the operating cost is based on the estimated manpower requirement on the existing scales of pay and allowances. The manpower requirement, which would be around 82 during construction and around 76 for operation phase, has been worked out on the basis of

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prevailing norms and practices. The requirement of manpower is expected to be met through internal deployment as well as by induction of competent personnel, who will be trained to operate the system.

7.2.4 Repair and Maintenance

7.2.4.1 Repair and maintenance of the mainline has been considered to be about 1% of the investment in the mainline. Similarly, repair and maintenance of the stations has been considered to be about 2% of the investment on stations, telecommunication & telesupervisory system.

7.2.5 General Administration Expenses

7.2.5.1 The cost under this head covers management expenses including security services, insurance of facilities etc. being proposed in the pipeline system.

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Attachment-7.1

Ennore-Trichy-Madurai LPG Pipeline

Operating Cost

(December 2012 price level)

(Rs. in Lakh)

S. No. Description of Item Cost per Annum

1. Power (for prime movers) 323

2. Utilities

Power & Water 29

3. Manpower 1176

4. Repair & Maintenance a) Mainline 379 b) Pump Station and others 416

5. Other Expenses

a) General Administration Expenses 646

b) Insurances 55

Total 3024 (Say, Rs. 30 crore)

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CHAPTER - VIII

8.0 FINANCIAL ANALYSIS

8.1 Project Financing 8.1.1 Capital cost of the project is considered to be financed through internal resources/commercial borrowings. For the purpose of financial analysis, Debt:Equity ratio of 1:1 has been considered, with interest rate of 10.75% per annum and repayment in 8 equal installments, with one year moratorium from the date of commissioning. Requirement of working capital will be met through internal resources.

8.2 Financial Analysis 8.2.1 Financial analysis for the proposed pipeline system has been carried out taking into account the following.

 Capital cost of the pipeline and its operation for 15 years / 25 years  Throughput as indicated in the optimization study for 2016-17 and 2021-22  Corporate savings, as assessed in the optimization study, as Revenue  Benefit due to lower transit loss in pipeline transportation compared to losses permitted for transportation through road tankers  Savings in the loading and decanting charges associated with road tankers on notional basis Results of the financial analysis are as under.

15 years’ operation 25 years’ operation ROI (%) 16.2 17.5 ROE (%) 19.8 21.1

8.2.2 Sensitivity analysis has also been carried out, the results of which are as under. 15 years operation 25 years operation Case ROI (%) ROE (%) ROI (%) ROE (%) Increase in capital cost by 10% 14.8 17.6 16.2 19.1

Increase in operating cost by 10% 16.0 19.4 17.3 20.7

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15 years operation 25 years operation Case ROI (%) ROE (%) ROI (%) ROE (%) Decrease in throughput by 10% 14.2 16.8 15.8 18.5

All the above together 12.6 14.3 14.3 16.3

8.2.3 Economics of Ennore-Trichy Pipeline 8.2.3.1 If pipeline is terminated up to Trichy, the results of financial analysis would be as under.

15 years’ operation 25 years’ operation ROI (%) 18.0 19.2 ROE (%) 22.1 23.2

8.2.4 It is seen from the above that the proposed pipeline is viable under most of the scenarios considering the prevailing hurdle rate of 13%. The pipeline will facilitate cost-effective transportation of LPG from Ennore to LPG bottling plants at Chengalpet, Pondicherry, Trichy and Madurai.

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CHAPTER – IX

9.0 CONCLUSIONS AND RECOMMENDATIONS

9.1 With commissioning of IPPL’s LPG import terminal at Ennore, which was set up primarily to meet the deficit of LPG in Tamil Nadu, requirement of domestic category of LPG for various bottling plants in Tamil Nadu, Cuddapah in A.P. and part requirement of Devanagonthi is met from Ennore by road tankers.

9.2 Most of the LPG bottling plants in Tamil Nadu are situated at considerable distance from Ennore. Optimization study indicates that there would be considerable savings by laying a LPG pipeline from Ennore to Madurai via Chengalpet, Pondicherry and Trichy, which would substitute road movement of LPG ex-Ennore to these bottling plants.

9.3 The proposed pipeline will facilitate cost-effective transportation of LPG from Ennore to different bottling plants in the state of Tamil Nadu and also at Pondicherry in a safe, cost-effective, environment-friendly and reliable manner. The pipeline would replace significant movement of LPG by road tankers and would thus provide relief from problems associated therewith

9.4 In view of the above, it is proposed to lay Ennore-Trichy-Madurai LPG pipeline which would originate at Ennore and terminate at existing Madurai bottling plant, providing pipeline connectivity en route to the existing LPG bottling plants at Chengalpet, Pondicherry and Trichy.

9.5 Results of the financial analysis indicate that the proposed LPG pipeline is viable considering the prevailing hurdle rate of 13%.

9.6 Keeping the above in view, it is recommended to consider this pipeline at an estimated cost of Rs.711 crore including a foreign exchange component of Rs.202 crore, at December 2012 price level.

9.7 The project is estimated to be completed in a period of about 30 months after receipt of all statutory clearances.

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9.8 Accordingly, this report is submitted for approval of the Board to the above recommendations.

***

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ANNEXURES

Ennore-Trichy-Madurai LPG Pipeline Hydraulic Gradient Considering Heart Cut Operation

2800

2600

2400 MAOP 2200 2000

1800 1723 MCL

1600

1400

) 1200 LL RH-1270 MCL 1000 800 RH-946 MCL

Head (MC 600

400 RH-464 MCL 200 RH- 222 MCL 0 0 50 100 150 200 250 300 350 400 450 500 550 Chainage (km) Ann Station Ennore Chengalpet T Point to Pondicherry T-Point to Trichy Madurai exure-I Chainage (Km) 0 125 226 419 541

Altitude (M) 2 22 64 128 204 Ennore-Trichy-Madurai LPG Pipeline Schematic Flow Diagram

10.75” OD 10. 75” OD From IPPL Ennore Storage Tanks 8.625” OD Chengalpet 10.75” OD Ennore (Ch. 125 km) T-Point for Pondicherry (Ch. 0 km) (Ch.226 km)

8.625” OD

Madurai T-Point for Trichy (Ch. 541 km) 8.625” OD (Ch.419 km) Pondicherry (55 km ex T-Point)

LEGEND Anne Trichy Scraper Barrel (19 km ex T-Point) Pumping Unit x

(Operating) II - ure Valves Pumping Unit (Stand By) Marketing Storage Tanks Annexure-III Ennore-Trichy-Madurai LPG Pipeline Route Map

Delivery Station Pump Station Proposed LPG Pipeline Ennore-Trichy-Madurai LPG Pipeline Typical SCC Confi guration

DUAL REDUNDANT SCC DUAL REDUNDANT OPERATOR STATION-IN-CHARGE ENGINEERING TERMINAL SERVERS WORKSTATION TERMINAL

DUAL REDUNDANT 100 MBPS ETHERNET LAN

FRONT END SERVER ROUTER

TO MCS LASERJET DUAL REDUNDANT PRINTER PLC – 32 BIT

DOT MATRIX PRINTER

TO RCP LOCATIONS

FIELD

DEVICES Annexur

FLOW e COMPUTER e -IV(a) Chengalpet, Pondicherry , Trichy and Madurai Stations Ennore-Trichy-Madurai LPG Pipeline Typical MCS Config uration at Ennore

DUAL REDUNDANT SCC- PLASMA DISPLAY APPLICATION ENGINEERING SIC HISTORIAN DUAL REDUNDANT SCADA OPERATOR PANEL SERVER TERMINAL TERMINAL SERVER MCS SERVERS WORKSTATION 50”TFT Screen Display

DUAL REDUNDANT 100 MBPS ETHERNET LAN

FRONT END SERVER ROUTER

LASERJET PRINTER TO SCCs

DUAL REDUNDANT MCS- DOT MATRIX PRINTER OPERATOR WORKSTATION

TO RCP LOCATIONS Annexur

FIELD DEVICES

FLOW e COMPUTER e -IV(b) Ennore-Trichy-Madurai LPG Pipeline Typical Confi guration at T-Point Locations O V

SCC / MCS CH ER DATA ANNEL COMMN. COMMN. -48 V nominal DC TO DC -40 V to – 60 V DC CONVERTER

FIELD DEVICES

FLOW Annexur COMPUTER e -IV(c) Ennore-Trichy-Madurai LPG Pipeline Typical RTU Confi gurations at RCP/SV Locations

SCC / MCS O V ER DATA C ER DATA H ANNEL COMMN. -48 V nominal DC TO DC -40 V to – 60 V DC CONVERTER

FIELD DEVICES Annexur e -IV(d) Ennore-Trichy-Madurai LPG Pipeline

Project Completion Schedule

123456789101112131415161718192021222324252627282930 S.No. MONTHS--->

ACTIVITY

1 Design and Detailed Engineering

2 Survey, Land/ RoW Acquisition & Payment of Crop Compensation

3 Procurement of Pipes and Mainline Materials

4 Procurement of Materials for Station Facilities

5 Mainline Construction

6 Construction of Station Facilities

7 Cathoic Protection Works

8 Telecom, Telesupervisory and SCADA works

9 Progressive Commissioning

LEGEND

COMMISSIONING LAND / ROW & CROP COMPENSA M/L MATERIALS & COA PCP WORKS Annexure-V DETAILED ENGINEERING SCADA WORKS MAINLINE CONSTRUCTIO

STATION CONSTRUCTION STATION MATERIALS

NOTE : Overall completion period for the project with progressive commissioning of facilities has been envisaged as 30 months from the date of obtaining relevant statutory clearances.