Why Reliance did not bid for Central India Pipeline

Vol 6, PW 14 (11 Sep 02) Midstream & Downstream

WE HAVE NO official comment from Reliance on why it chose not to bid for the Central India Pipeline even though it holds 26% stake in Petronet Central India Ltd, the company set up to oversee the project.

But it is well known that Reliance has its own, ambitious plans to lay a network of pipelines feeding the main petroleum product demand zones. One of these proposed pipelines runs almost parallel to the route of Petronet-India's Central India Pipeline.

A source tells us Reliance has completed a route survey and preliminary engineering activities for its pipeline. Worley of Australia is its project management consultant.

"Reliance's plan is to place orders and begin work on news of the official death of the Petronet pipeline," we are told. Officially, the Reliance pipeline is permitted to transport only gas but it will be a minor matter for it to get permission to transport products.

Is this why Reliance did not bid "Largely yes. But the financials of the Petronet-India project also do not look good.

Demand for petroleum products is down for the past two years due to the domestic economic slowdown. This will severely hit the revenues of the pipeline." Reliance also believes it is cheaper to transport naphtha by coastal tanker from Jamnagar to Koyali instead of using the Central India Pipeline.

Then, there is Bharat Petroleum's plan to extend its Mumbai-Manmad pipeline another 400-km further north to Indore. "This pipeline will be ready by 2004-05 and will carry products from its Mumbai refinery to a part of the market that the Petronet pipeline is supposed to serve."

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