Farmers delay Mundra-Bhatinda crude pipeline

Vol 13, PW 14 (17 Dec 09) Midstream & Downstream

Gujarat farmers are delaying completion of a 1024-km crude oil pipeline promoted by Hindustan Petroleum and steel baron Lakshmi Mittal for the upcoming 9m t/y Bhatinda refinery.

PETROWATCH learns Mumbai-based pipeline contractor Kalpa-Taru Power Transmission has completed only 200-km of its 544-km stretch in Rajasthan and Gujarat because farmers are withholding Right of User (RoU) permission for their land. “Securing RoUs from Gujarat farmers is very difficult,â€‌ says a Kalpa-Taru source.

“Hindustan Mittal should have secured this before awarding the contract. There will definitely be a commissioning delay.

â€‌ Kalpa-Taru has been given 17 months to complete its stretch and one month after that for commissioning, taking the official completion deadline to August 2010. But company sources tell us DB Rahevar - the Gujarat state government appointed â€کcompetent authority’ to help with the RoU process - failed to convince farmers to accept the compensation offered.

When contacted, Rahevar confirms that he advised Hindustan Mittal not to interact with farmers directly. “These dealings should be left to the contractor,â€‌ he tells us.

“Farmers need to be handled tactfully.â€‌ Rahevar advised Hindustan Mittal to pay an additional amount to farmers over and above the 10% market value of the land that is usually paid.

He said when a pipeline crosses a farmer’s holdings the land is dug up so the pipeline can be buried. This disrupts crop cycles and can leave land infertile.

Pipeline contractors typically compensate farmers for 10% of the land’s market value, but rarely compensate for disrupted crops. “Farmers don’t directly benefit from the pipeline,â€‌ adds Rahevar, “so they resist.

â€‌ In the past, companies have not properly restored land, especially in the Kutch region. A senior Hindustan Mittal source confirms resistance from farmers but adds work is progressing to schedule and that the company is happy with its contractors.