Annual Report FY 2009-10 - Welspun

th15 Annual Report 2009-10Formation of the Petroleum & Natural Gas Regulatory Board to give boost to trunk pipelinesThe Petroleum & Natural Gas Regulatory Board (PNGRB) was formed by an Act of Parliament in 2006. The board was assigned to be thenodal agency to regulate the refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleumproducts and natural gas excluding production of crude oil and natural gas.With the setting up of the PNGRB and new gas finds on India's eastern coast, heavy investment is being lined up for laying pipelinesacross the country. As per plans, the length of trunk pipelines is set to triple to 33,000 kms in the next 4-5 years. The PNGRB is currentlyevaluating Expression of Interests (EOI) from various companies for about 26 per cent of proposed pipe length and has already invitedEOI for around 2,500 km of the total capacity.City Gas Distribution set to take-offThe PNGRB issued a number of regulations pertaining to pipeline and CGD such as exclusivity, open access, tariffs, common carrierprincipal and approval for new projects.Once Section 16 of the PNGRB Act is notified, which is expected shortly, the board is expected to aggressively auction out licenses forCity Gas Distribution (CGD) networks in about 200 cities. This section authorizes PNRGB to issue licenses for City Gas Distribution (CGD)networks. Indraprastha Gas Ltd, which had a pre- PNGRB authorization for Compressed Natural Gas (CNG) operations in Ghaziabad,and Voice-of-India, a non-government organization, challenged PNGRB's move in the Delhi High Court. In January 2010 the Court,ruled that PNGRB had no powers to issue licenses for retailing CNG and piped gas in cities as Section 16 had not been notified andauthorizations issued till then were not valid. The government now plans to notify Section 16 of the PGNRB Act which gives theregulatory board the authority to issue licenses for CGD networks which it plans to expand to more than 200 cities.In the first round of bidding, PGNRB issued licenses for CGD networks in 6 cities (Sonipat, Meerut, Kakinada, Dewas, Kota and Mathura).In the next round it was to award licenses to another 7 cities but deferred the process due to the court order. Twelve more cities will beup for bidding in the third round.Liquefied Natural Gas (LNG) terminals projects to enhance pipe demandIndia is importing LNG, which provides the energy security to the country. Players like Petronet LNG Limited, Shell and others havecreated and are creating large LNG terminals at various locations across the country (like Dahej, Hazira, Dabhol, Kochi, Ennore). Thisprovides another opportunity for pipe demand.Water Infrastructure projects: A Key driver for HSAW pipesEconomic growth, population expansion and the influx of people into cities have sharply raised India's water requirements. AsianDevelopment Bank (ADB) has doubled its investment on water from U$1.2 bn in 1999 to U$2 bn in 2010 in the South and Southeast Asiaregion. In order to improve the sanitation levels as also to make available water to common man, the Government of India (GOI)launched the reform linked Jawaharlal Nehru National Urban Renewal Mission (JNNURM) along with Urban InfrastructureDevelopment Scheme for Small and Medium Towns (UIDSSMT) in December 2005. The total outlay for the Urban Infrastructure andGovernance component of JNNURM is Rs. 315 bn for the mission period 2005-2012. Water and sanitation sector which covers watersupply, sewage, solid waste management and storm water drainage accounts for about 73.4 % of the total number of projectssanctioned under JNNURM as on date and 80.8% of the total cost of projects sanctioned. In the absolute terms, the number of suchprojects sanctioned is 340 out of a total of 463 projects sanctioned under the scheme. Further under the Urban InfrastructureDevelopment Scheme for Small and Medium Towns (UIDSSMT), out of a total of 969 projects, the water and sanitation sector accountsfor 828 projects. The share of water and sanitation sector in terms of cost is around 92% i.e. Rs. 184 bn out of Rs. 198 bn. Looking at thequantum of spend under the aforesaid schemes, this provides a huge opportunity for HSAW pipe industry.32