National Gas Grid

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Context: The Government has approved the Viability Gap Funding, VGF of 5 thousand, 559 crore rupees to Indra Dhanush Gas Grid Limited to build Natural Gas Pipeline Grid covering 8 North-Eastern states.

Relevance:
Prelims: Current events of national and international importance.
Mains: GS III- Infrastructure: Energy, Ports, Roads, Airports, Railways, etc.

 

National Gas Grid:
  • Objectives:
    • To remove regional imbalance within the country with regard to access to natural gas and provide clean and green fuel throughout the country.
    • To connect gas sources to major demand centres and ensure the availability of gas to consumers in various sectors. Development of City Gas Distribution Networks in various cities for the supply of CNG and PNG.
  • Implications:
    • Gas delivered via pipeline in the urban households would minimize the use of gas cylinders. These empty gas cylinders can be shifted to the rural area to deliver cooking gas. This will be a major boost to achieve accessibility of clean cooking fuel to all the households in the rural areas.
    • Natural gas is less costly when compared with other conventional fuels. Pipeline delivery comparatively immunizes against inflation of transportation costs.
    • Natural gas is a cleaner-burning fuel that has less impact on the environment. Natural gas fireplaces can reduce up to 99% of the number of pollutants and particles emitted into the air compared to wood. Industries that use “dirty fuel” to power their project, can shift to cleaner fuel. Thereby, natural gas can considerably bring down air pollution levels.
    • Most importantly, this project would bring down government subsidy to LPG. Also, the siphoning of cylinders to the black-market would come to an end.

What Is Natural Gas?

  • Natural gas is a naturally occurring hydrocarbon gas mixture consisting primarily of methane, but commonly including varying amounts of other higher alkanes, and sometimes a small percentage of carbon dioxide, nitrogen, hydrogen sulfide, or helium.

Category:

  • Natural gas available in India can broadly be classified into two categories, viz.
    • (i) Domestic Natural Gas and
    • (ii) Imported Re-gasified Liquefied Natural Gas (R-LNG).

Urja Ganga Scheme:

  • The government has launched an ambitious “Urja Ganga” gas pipeline project which aims to provide piped cooking gas to residents in Varanasi within two years and in another year after that, it would cater to the needs of people in Jharkhand, Bihar, Odisha, and West Bengal.

Significance:

  • In this scheme, not only households but about half a million vehicles may switch over to CNG mode so that the problem of fuel in the country could be resolved.
  • The National Gas Grid together with providing gas connections to households will provide better infrastructure for automobiles using gas.
  • The National Gas Grid will also aid in renewing of the fertilizer sector and also give a boost to the Power and Automotive sector.

What is City Gas Distribution?

  • The world runs on energy.
  • Conventional fuels such as petrol and diesel have been in use for decades, But the current demand-supply gap in energy, depletion of fossil fuels and environmental constraints have created a necessity for exploring alternative energy resources that are cleaner and environment-friendly.
  • Natural gas is being considered as the fuel of the day. Natural Gas Distribution or City Gas Distribution (CGD) is a growing sector that aims to provide an uninterrupted supply of gas to domestic, commercial and industrial customers in the form of PNG and CNG.
  • The present mode of delivery of gas is through cylinders which is a costly affair. CGD system uses a pipeline system for the transport of gas and its distribution among consumers.

Why Natural Gas?

  • Natural gas is a superior fuel as compared with coal and other liquid fuels being environment-friendly, safer and cheaper fuel.
  • Natural Gas is supplied through pipelines just like one gets water from the tap. There is no need to store cylinders in the kitchen and thus save space.
  • Natural Gas (as CNG) is cheaper by 60% as compared with petrol and 45 % w.r.t. Diesel.
  • Similarly, Natural Gas (as PNG) is cheaper by 40 % as compared with market price LPG and the price of PNG almost match that of subsidized LPG (based on prices in Delhi).
  • An autorickshaw owner can save Rs 7000-8000 on his monthly fuel bill by conversion from petrol to CNG.
  • Thus, even on the cost front as well, natural gas is preferable to petrol, diesel and LPG.

India’s Commitment to the World:

  • This assumes significance in a country that is now the biggest emitter of greenhouse gases after the US and China.
  • India has made a commitment to COP21 Paris Convention in December 2015 that by 2030, it would reduce carbon emission by 33% of 2005 levels.
  • Natural gas, as domestic kitchen fuel, as fuel for the transport sector as well as fuel for industries and commercial units, can play a significant role in reducing carbon emission.

Issues Involved:

  • Lack of adequate compensation:
    • The amount of compensation paid over whose land the pipe is being laid is minimal.
  • Legislative constraints:
    • Unlike power which is a concurrent subject, petroleum (consequently, gas) is in the union list. Since the gas pipeline will spread into the remotest corners of the state, the central government has to reach out to the state well in advance so as to facilitate land availability for the project.
  • Safety concerns:
    • Safety is one of the main issues involved. The dealers have to educate the consumer regarding the new system.
  • Irregularities:
    • Irregular supply of gas has plagued the domestic market for quite some time. The domestic production is not adequate and we are mostly dependent on the import which again is vulnerable to fluctuations in international prices and geopolitical turmoil.
  • Logistic and Infrastructural issues:
    • Low penetration of gas-based equipment and appliances, manpower inadequacy, no separate corridors available in the city area for laying of gas pipelines.

Way Forward:

  • First and foremost, the government should build adequate infrastructure, either with the help of the private sector or through Public-Private Partnership.
  • The government needs to take leadership (viability gap funding) in order to ensure that the whole value chain moves in a synchronized manner and ensures commercial viability.
  • The rational pricing of the gas is sin quo no.
  • Both the customers and the private investors have to be protected by devising the right mechanism to price the gas.
  • The initial cost of laying the pipeline per consumer has been estimated at around Rs 14000 to Rs 18500.
    • Hence, in this regard, the government should intervene by adequately subsidizing the initial setup.
  • Natural gas is also used in sectors like mainly power generation and fertilizer production, etc. Hence, the proper allocation must be made with regard to gas for each sector.
    • A certain portion of the gas has to be allocated for the CGD – a steady flow of gas should be ensured for it.
  • The consumers have to be encouraged to shift to PNG from gas cylinders.
  • The government should incentivize the procedure through subsidy and at the same time assuring the customers of uninterrupted supply.
National Gas Grid Extension In North East:
  • The 1,656-km pipeline will connect Guwahati in Assam to major cities in the region such as Itanagar, Dimapur, Kohima, Imphal, Aizawl, and Agartala.
  • The project is critical towards implementing the government's Hydrocarbon Vision 2030 for the North-East. The Gas Pipeline Grid would be developed in all the eight states of the North-Eastern region. 
Indradhanush Gas Grid Limited (IGGL), a joint venture company of five CPSEs (IOCL, ONGC, GAIL, OIL, and NRL) has been incorporated on 10.08.2018 to develop and operate Natural gas pipeline grid in North-East region. 

 

 

Viability Gap Funding (VGF):
  • Viability Gap Funding (VGF) Means a grant one-time or deferred, provided to support infrastructure projects that are economically justified but fall short of financial viability.
  • The lack of financial viability usually arises from long gestation periods and the inability to increase user charges to commercial levels. Infrastructure projects also involve externalities that are not adequately captured indirect financial returns to the project sponsor.
  • Through the provision of a catalytic grant assistance of the capital costs, several projects may become bankable and help mobilise private investment in infrastructure.

 

Hydrocarbon Vision 2030 for the North-East:
  • The Union Ministry of Petroleum and Natural Gas has released the Hydrocarbon Vision 2030 for north-east India.
  • This vision document outlines steps to leverage the hydrocarbon sector for the development of the North- East region.
  • The Vision Document has been a focused and consultative exercise to develop a common and shared aspiration for benefiting people of the northeast region.
  • The Vision aims at doubling Oil & Gas production by 2030, making clean fuels accessible, fast-tracking projects, generating employment opportunities and promoting cooperation with neighboring countries.
  • Objectives of the vision document:
    • To leverage the region’s hydrocarbon potential, enhance access to clean fuels, improve the availability of petroleum products.
    • To facilitate economic development and to link common people to the economic activities in this sector.
  • Details:
    • The states covered under this vision
      • Include Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura.
      • The policy focus areas include moderation in light of specific terrain and weather conditions of the region coupled with ensuring fund planning for new projects.
      • As for partnership, the stress is on greater involvement of state governments in planning and implementation, and on boosting trade with neighboring nations.
      • In projects, the focus is on pipeline connectivity for carrying liquefied petroleum gas, natural gas, and petroleum products, oil and lubricants; building refineries and import links; and development of compressed natural gas highways and city gas distribution network.
      • The production side emphases include production enhancement contracts, technology deployment, and fast-track clearance, and development of service provider hubs.
  • The Vision rests on five pillars:
    • People, Policy, Partnership, Projects, and Production. For people, it foresees clean fuel access to households alongside fostering skill development and involvement of the local community.

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