The Telegraph
Since 1st March, 1999
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Oil majors dash railways’ pipedream

New Delhi, March 23: The tide is continuing to turn against the railways in the lucrative movement of petroleum products although railway minister Nitish Kumar’s budget made a valiant bid to woo the oil companies.

With the Rs 100-crore Kandla-Samakhali gas pipeline owned by Gail (India) Limited nearing completion towards the end of this month, the railways are set to lose a neat chunk of the long-haul LPG traffic as well.

Similarly, Indian Oil Corporation’s Mathura-Agra-Tundla product pipeline will also be completed this month and the oil major plans to extend it to Gwalior. This will deprive the railways of the petrol, diesel and kerosene traffic on this route.

The Railway budget has provided for a decline of 1.5 million tonnes in the petroleum goods traffic during the year to 33 million tonnes from 34.5 million tonnes in 2001-02. However, in practice, this fall is likely to be much higher.

The Bangalore-Mangalore pipeline will also be commissioned this year, which alone will deprive the railways of 2.5 million tonnes of petroleum goods traffic that is transported by rail at present. This 364-km pipeline has a design capacity of 8.5 million tonnes per annum to cater to the 9-million-tonnes Mangalore Refineries.

With upstream major ONGC taking over the refinery and entering the marketing of petroleum products, there will be a greater movement of petrol, diesel, kerosene, aviation turbine fuel and naphtha. However, the railways will not get a slice of this larger cake.

Gail chairman Proshanto Bannerjee told The Telegraph that the new 70-km gas pipeline from the Kandla port will join the Jamanagar-Loni (near Delhi) pipeline at Samakhali. On an average Gail expects to transport around 15,000 tonnes of LPG per month. At the moment, all the LPG imports at Kandla are carried by the railways to consumption centres in the north.

Bannerjee said the LPG bottling plants in places like Jodhpur and Jaipur to which the railways carry imported LPG are actually designed to be operated with pipeline supplies. This ensures a safer and faster transfer of the high-pressure gas to the storage facilities at the bottling plants.

While the Railway budget proposes to draw up special long-term contracts with the oil companies, the truth is that the latter prefer pipelines to rail movement. It is considered a more modern form of transporting petroleum goods that is quick, costs less and is more reliable.

Railway officials feel they can entice away individual oil companies from the pipelines laid by others.

However, this is not likely to work in practice as the pipelines have been laid on the common carrier principle and provide for the use of other companies as-well-as in order to avoid wasteful duplication. This also holds good for the pipelines planned for the future.

Oil company officials point out that in advanced countries like the US as much as 58 per cent of petroleum products are transported through pipelines.

In India, the pipeline share is still around 35 per cent but its growth is considered inevitable. The share of the railways was 40.5 per cent in 1995-96 compared with the pipeline share of 21.3 per cent. The latter has been growing at the cost of the railways and roadways.

In the long run, pipelines are expected to carry most of the “white products” such as petrol, diesel, kerosene and aviation turbine fuel.

Black products and heavy-ends of products which include furnace oil, low sulphur heavy stocks, bitumen and lubricants will continue to move by road and rail.

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