Naik boost for Total's LPG project in Andhra Pradesh

Vol 7, PW 13 (10 Sep 03) People & Policy

Popular perception is that oil ministry bureaucrats and oil minister Ram Naik erect hurdles to even the most straightforward projects.

Not so with a proposed 60,000 tonnes underground LPG storage project at Vishakapatnam in Andhra Pradesh, promoted jointly by Hindustan Petroleum and Total of France. We understand Naik wants to see construction begin as soon as possible for this facility, the biggest of its kind in India.

But both have to lobby hard with an obstinate defence ministry to accelerate the project. Defence ministry opposition centres on the fact that 60,000 tonnes of LPG will be stored underground just outside Vishakapatnam port - home to the Indian navy's eastern fleet.

A source reveals the oil ministry last month offered the defence ministry a detailed presentation on the subject from HPCL to dispel any fears. Last month, Naik wrote to defence minister George Fernandes seeking his 'intervention' to move the project forward, "as the construction contract was awarded more than four months ago." At stake is the oil ministry's oft-repeated pledge to foreign investors that bureaucratic delay and red tape are history.

Of less concern, but significant nonetheless, is the inevitable cost escalation brought on by any delay. Construction should have begun four months ago but for a letter sent in May by Dr MVVS Murthi, an MP from Vishakapatnam, to shipping minister Shatrughan Sinha.

Said Murthi: "The project is indeed laudable and welcome (but) the site selected is not appropriate on account of its sensitive location, and needs reconsideration, especially on account of the recent regional instabilities that have arisen." Murthi raises six issues. The most important is that the cavern is planned at the entrance to the 'inner harbour' and any explosion caused by an accident or sabotage could lead to a shutdown of the port and 'bottling' in of the Indian navy.

Also important, said the MP, is that the site is easily reached and a sitting target for saboteurs. "Given the larger and critical issues of security, trade, commerce and livelihoods," writes Murthi.

"An alternative and more suitable location may be chosen without any loss of time, and a grave vulnerability averted.