The Oil Ministry has decided to cancel permits issued to billionaire Mukesh Ambani's privately owned RGTIL to lay four natural gas pipelines saying there were inordinate delays in construction of the 2,175-km lines.
The Ministry refused to buy RGTIL's argument that the government has already allocated all of the projected 91 mmscmd gas output from the KG-D6 fields to customers in Andhra Pradesh, Maharasthra and other northern states, leaving no gas for transportation through its proposed pipelines from Kakinada to Howrah, Chennai, Tuticorin and Mangalore.
Sources said the ministry, which had in 2007 made it a condition that RGTIL cite a source of gas before it is given license or authorisation to lay the pipelines, has not agreed with the the company's assertion that in absence of any gas allocation the pipelines will be infructuous investment.
The Ministry also rejected the firm's assertion that it has done all ground work including route survey, pre-engineering and acquisition of right of use and it would start work the moment government identifies a source of gas that would feed the pipelines.
The pipelines, RGTIL had asserted, would be ready one month before the source or field is ready to deliver the gas.
"Yes, it has been decided to cancel
authorisation issued to Reliance Gas Transportation Infrastructure Ltd for laying of four pipelines from Kakinada in Andhra Pradesh to Howrah in West Bengal, Chennai and Tuticorin in Tamil Nadu and Mangalore in Karnataka," a top source in the ministry said.
However, a formal letter cancelling the authorisation is yet to be issued as the file is pending approval of Oil Minister S Jaipal Reddy.
Sources said the ministry is basing its decision on a recommendation made by the oil regulator, Petroleum and Natural Gas Regulatory Board.
RGTIL and its subsidiary had in response to showcause notice issued by the ministry last month stated that it was ready to furnish the bank guarantees as required but had been intimated of the format by PNGRB so far.
But the ministry saw non-submission of the performance bank guarantee as breach of terms and conditions of authorisation issued to RGTIL and its subsidiary, they said.
Relogistics Infrastructure Ltd (Relog), a subsidiary of RGTIL, had in 2007-08 won government authorisation to lay Kakinada-Basudebpur-Howrah pipeline, Kakinada-Chennai line, Chennai-Bengaluru-Mangalore pipeline and Chennai-Tuticorin line but physical work on these pipelines haven't yet started.
Relog cited uncertaintly about availability of gas for not building the lines 3 year timeline specified in the 2007 authorisation.
The three year period expires this month.