2010

Jagdishpur-Haldia Pipeline: Demand Estimation & Tariff Determination
GAIL (INDIA) Limited

Ankit Sethi University of Petroleum and Energy Studies, Dehradun 2010

JAGDISHPUR-HALDIA PIPELINE:

DEMAND ESTIMATION & TARIFF DETERMINATION

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Project Report Approval Sheet

This is to certify that the project mentioned below, has been completed by Mr. st st Ankit Sethi under my guidance during the period w.e.f 1 June 2010 to 31 July 2010. 1. 2. Jagdishpur-Haldia Pipeline: Demand estimation & Tariff Determination Proposal for Bhatinda-Srinagar Pipeline

He has submitted this project report towards partial fulfillment of curriculum of Master’s Degree of Business Administration in Oil and Gas, University of Petroleum and Energy Studies, Dehradun. To my best knowledge, the matter presented in the project has not been submitted anywhere else. The same is hereby approved.

Rajesh Bagaria Senior Manager Gas Authority of India Limited (GAIL), Delhi

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JAGDISHPUR-HALDIA PIPELINE:

DEMAND ESTIMATION & TARIFF DETERMINATION

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Acknowledgem ent

It gives me immense pleasure to be attached with Gas Authority of India Limited (GAIL), Delhi which has provided me a very unmatched training in my summer internship. I place special thanks to the Deputy General Manager Mr. G. S. Chouhan for his continuous support. I gratefully acknowledge my profound indebtedness towards my esteemed mentor Mr. Rajesh Bagaria Senior Manager, GAIL (India) Ltd for his valuable guidance, excellent supervision and constant encouragement during the entire course of work, without which the present work would have not been possible. A special thanks to Mr. Vivek. R. S. Neelam Senior Officer (pricing) and Mr. V. K. Duggal, Deputy General Manager ,Business Development BPCL Delhi for extending their support in the successful completion of my project. I also express sincere gratitude to the faculties, UPES Dehradun for providing pivotal study material. Last but not least, I would also like to thank the entire team of GAIL, for their constant support.

. Thanking you

Ankit Sethi University of Petroleum & Energy Studies Date: Dehradun, Uttrakhand

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JAGDISHPUR-HALDIA PIPELINE:

DEMAND ESTIMATION & TARIFF DETERMINATION

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CONTEN TS Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . ............... 6 Executive Summary . . . . . . . . . . . . . . . . . . . . . . ...............7 1. Overview of Indian Economy . . . . . . . . . . . . . . . . . . . . .9 1. 1. Demand-Supply Outlook . . . . . . . . . . . . .10 1. 2. Company Profile . . . . . . . . . . . . . . . . . . . 12 2. Prioritization of Natural Gas . . . . . . . . . . . . . . . . . . . . . . .14 3. The Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 3. 1. Jagdishpur-Haldia Pipeline . . . . . . . . . . 17 4. Jagdishpur-Haldia Pipeline. . . . . . . . . . . . . . . . . . . . . . . . .18 4. 1. Basic Parameter. . . . . . . . . . . . . . . . . . . . 19 4. 2. Gas Supply Scenario . . . . . . . . . . . . . . . . 20 4.3. Project Schedule & Cost Estimate . . . . . 22 5. Gas Throughput for Transmission TariffsJHPL. . . . . . . . 23 5. 1. Optimal Pipe Size . . . . . . . . . . . . . . . . . . 23 5. 2. Proposed Pipeline System . . . . . . . . . . . 25 6. Project Cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 7. Project Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 7. 1. Total Revenue. . . . . . . . . . . . . . . . . . . . .34 7.2. Capital Expenditure . . . . . . . . . . . . . . . . . 34 7. 3. Operating Expenditure . . . . . . . . . . . . . . 35 7. 4. Methodology for Tariff calculation . . . 36 4|Pag e

. . . . . . . . . . Means of Finance. . . . SWOT Analysis. . . . . . . . . 53 14. 0 7. . . . . . . . . . . . . . . . . . . . . . 44 11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sensitivity Analysis. . 51 12. . . . . . . Risk Analysis & Mitigation Strategies. . . . . 37 8. . .40 9. . . . . . . . . . 54 ANNEXURE-1: Envisaged Market ANNEXURE-2: Capacity Build Up in Phases 5|Pag e . . . . . . . 52 13. . . . . .42 10. . . . Project Profitability.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF 201 DETERMINATION Transportation Tariff. Basic Assumption. . . . . . . . Conclusion and Recommendations. . . . . . 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 Facts & Figures Table 1: Table 2: Outlook Table 3: sources Table 4: gap Table 5: Parameters Table 6: Scenario Table 7: Table 8: Estimate Table 9: Table 10: Table 11: Table 12: Tariff Table 13: Finance Table 14: Table 15: Assumptions Table 16: Analysis Table 17: Analysis Figure 1: Figure 2: Figure 3: Gas Scenario: Present & Future Demand Gas Supply Demand supply Basic Gas Supply Projected demand year wise Project Schedule and Cost Proposed Pipeline System Capital Outflow Total Revenues Transportation Means of Free cash Flow Basic Profitability Sensitivity Prioritization of Natural Gas JHPL Map Profit after Tax 6|Pag e .

PNGRB Board ROW SAIL WBPDC Corporation Full Form City Gas Distribution Compressed Natural Gas City Gas Station Calorific Value Capital Expenditure Debt-Service Coverage Ratio Earnings Before Income and Tax Fertilizer Corporation of India Heads of Agreement High Speed Diesel Interest During Construction Internal Rate of Return Jagdishpur-Haldia Pipeline Liquefied Petroleum Gas Liquefied Natural Gas Motor Spirit Metric Tons Per Annum Million Metric Tons Per Annum Million Metric Standard Cubic Meters Per Ministry of Petroleum and Natural Gas Million British Thermal Unit Operating Expenditure Profit After Tax Profit Before Tax Profit and Loss Account Petroleum and Natural Gas Regulatory Right of Way Steel Authority of India Limited West Bengal Power Development 6|Pag e .JAGDISHPUR-HALDIA PIPELINE: Glossary of DEMAND ESTIMATION & TARIFF DETERMINATION Terms 2010 Abbreviation CGD CNG CGS CV Capex DSCR EBIT FCI HOA HSD IDC IRR JHPL LPG LNG MS MTPA MMTPA MMSCMD Day MoP&NG MMBtu Opex PAT PBT P&L Acc.

Bihar. Chapra.0 20 29 Executive Summary Projected gas demand year wise by Marketing is tabulated below: HoA Gas In MMSCMD 2012-2013 20138. Ranchi. FCI Gorakhpur & DIL Kanpur) b) Power (CESC Haldia. Jagdishpur-Haldia pipeline (JHPL) project has been conceptualized to cater to the gas demand of consumers in the states of eastern Uttar Pradesh. Jamshedpur. WBPDC Bandel. is India's flagship Natural Gas company.Basudevpur-Howrah pipeline. The gas source for the pipeline has been considered KG Basin and ONGC Mahanadi Gas. Distribution and Marketing) and its related services. Transmission.8 28. FCI Sindri.78 Total 201418. WBPDC Sagardighi & Barh Power Plant) c) Industries (SAIL Durgapur. d) City Gas (Kolkata. Patna.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 Jagdishpur-Haldia Pipeline GAIL (India) Limited. Gopalganj. Jharkhand and West Bengal. Processing. This pipeline shall carry gas from ONGC Mahanadi and KG Basin through Reliance’s Kakinada. 7|Pag e .99 2017-2018 24.18 201520.1 0 5. Siwan.00 Pipeline system has been designed for meeting the gas demand in various sectors.15 15.6 5 10 20 12.8 8. Gas Supply Scenario Gas source envisaged & projected available gas volume on the JagdishpurHaldia pipeline system is given below: Source 2011-2012 5.1 17. The pipeline will start from Haldia and terminate at Phulpur.58 201622. SAIL Bokaro & Petrochemical Plant Barauni). HFC Barauni.1 Available Gas Volume(MMS CMD 2012-2013 2013-2014 2014-2015 7. integrating all aspects of the Natural Gas value chain (including Exploration & Production.1 7.6 KG Basin Mahanadi Gas Total 2015-2016 9. Details are given below: a) Fertilizers (HFC Durgapur. Betiah Varanasi & Allahabad). WBPDC Katwa. DPL Durgapur.

the capacity of this pipeline is 16 MMSCMD (which is inclusive of 4 MMSCMD for common carrier). As per the technical team the diameter of the pipeline is recommended at 36” for this project. the design capacity for JHPL in first phase will be 16 MMSCMD which will be augmented in second phase from 16 to 32 MMSCMD. Executive Summary 8|Pag e .JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 Gas Source for Jagdishpur-Haldia Pipeline would be available from KG Basin by Reliance. As per the authorization. however based on prevailing gas demand and gas availability scenario. Mahanadi Basin by ONGC and KG Basin by Gujarat state Petroleum Corporation.

These drivers are. Many uncertainties will affect the future gas demand level.1. Overview of Indian Economy Most agencies have projected India’s demand of natural gas to grow at a rate higher than other fuels such as oil and coal. however. India’s demand projections have been made at different points in time using different assumptions and for different periods. subject to a number of constraints in determining the actual level of gas demand: the price of gas and its competitiveness vis-à-vis other fuels and the rate at which the downstream market is developed in both power and non-power sectors. The future demand for natural gas in India will be driven mainly by two factors:  The need for new sources of energy to fuel economic growth and improve living conditions. and  The desire to reduce the consumption of coal and liquid fuels and thus the level of pollution. Summarizes the projections made by different agencies for the same milestone years over respective forecast period by adopting the process of interpolation and extrapolation. Co m . Competitiveness of natural gas against coal in power generation will also be a key determinant of gasdemand growth. Gas Scenario: Present & Future ( i n b i ll i on s o f c u b i c f e e t) 3000 2500 2000 1500 1000 500 0 2010 2030 Domestic Production Net Imports S o u r c e : I n f ra l i n e . particularly with respect to the cost of supply and India’s ability to create an integrated national transportation and distribution network.

There is already an import of LNG to the tune of 18 MMSCMD by PLL at Dahej. This is being supported by the commencement of LNG supply from the Hazira Terminal of Shell which is. there is a need to step up imports in the coming 5 years.28 201011 54.09 84 113. technical flaring and gas shrinkages.67 58.30 94 108. however. 1.30 Projected Domestic Supply 115. Therefore.08 57. the country is already pursuing imports.42 113. com . it is very clear that there would be a supply shortfall.30 202. both through the LNG route and the transnational pipeline route.22 108.09 201112 51.97 The estimated gap between domestic gas production and supply is mainly on account of internal use by the producers themselves. Looking at the overall demand projections and even the most optimistic scenario of expected domestic supplies.97 Scenario 1 (A+B) Total Projected Supply Scenario 2 (A+B+C) 189. Gas Supply Sources Sources ONGC + OIL (A) Pvt.09 197./ JVs (As Per DGH) (B) 200910 55.1.69 60. 1. 1. yet to stabilize. To augment the shortfall. Demand Outlook Sector Power Fertilizer City gas Industrial Petrochemicals/ refineries/ others/ internal consumption steel Sponge iron/ Total 2009-2010 100 52 14 17 29 7 219 2010-2011 11 79 15 18 31 7 26 3 2011-2012 12 79 16 20 33 8 28 1 1.97 (A+B) Additional Gas Anticipated 74 (C) Total Projected Supply 115. Source: Infrraline.

50 5.75 83.00 1. 1.97 88.13 MMSCMD by 2011-12 in Scenario I.00 2.97 -16.50 5.50 84 70.52 262.12 1.00 2.50 5.03 -5.09 108.00 94 83.00 70.00 2.00 52.00 15.42 242.09 191.30 74 52.12 168.00 5.com .47 267.03 Source: Infraline.47 183.50 10-11 10.09 285. 2.00 11-12 10.95 -5.42 225.07 279. The overall demand–supply balance is presented below: Supply Projected Domestic Supply (ONGC /JV/ PVT) (A) Additional anticipated supply (B) LNG (C) Total Supply (A+C) Scenario 1 Total Supply (A+B+C) Scenario 2 Demand (MMSCMD) Demand Supply Gap I Demand Supply Gap II 09-10 10-11 11-12 115.25 23.05 78. the gap would by and large be bridged from 2009-10 onwards and there is expected to be a demand–supply balance during the last 3 years of the XI Plan period. Demand – Supply Gap for Natural Gas Gap would increase steadily to 91.LNG/Supplies through Transnational Pipelines LNG Supply Source Dahej Hazira Dabhol Kochi Mangalore Total LNG Supply (MMTPA) Total LNG Supply (MMSCMD) 09-10 7.50 20. whereas under Scenario II.5 2.43 57.97 113.

we are spearheading the move to a new era of clean fuel industrialization. Processing. and Compressed Natural Gas (CNG) to the transport sector Participating stake in the Dahej LNG Terminal and the upcoming Kochi LNG Terminal in Kerala GAIL has been entrusted with the responsibility of reviving the LNG terminal at Dabhol as well as sourcing LNG GAIL Gas Limited. 2.480 78% Market Share in Natural Gas Transmission 70% Market share in Natural Gas Marketing Today.000 TPA of Polymers 1. th Incorporated Turnover (2009-10) Net Profit (2009-10) Employees Market Shares 16 August . creating a quadrilateral of green energy corridors that connect major consumption centers in India with major gas fields. LNG terminals and other cross border gas sourcing points.140 Crore 3.1984 Rs. a wholly owned subsidiary of GAIL (India) Limited.700 km of Natural Gas high pressure trunk pipeline with a capacity to carry 157 MMSCMD of natural gas across the country 7 LPG Gas Processing Units to produce 1. GAIL is also expanding its business to become a player in the International Market. Kanpur. 2008 for the smooth implementation of City Gas Distribution (CGD) projects. Agra. Transmission. Mumbai. was incorporated on May 27. for supplying Piped Natural Gas (PNG) to households and commercial users.996 Crore Rs.10. Agartala and Pune. Established presence in the CNG and City Gas sectors in Egypt through equity participation in three Egyptian companies: Fayum Gas Company SAE.1. Bhopal. integrating all aspects of the Natural Gas value chain (including Exploration & Production. 1956. 24.2 MMTPA of LPG and other liquid hydrocarbons North India's only gas based integrated Petrochemical complex at Pata with a capacity of producing 4. Company Profile GAIL (India) Limited.8 MMTPA of LPG 27 oil and gas Exploration blocks and 3 Coal Bed Methane Blocks 13. 3. In a rapidly changing scenario. Distribution and Marketing) and its related services. Stake in China Gas Holding to explore opportunities in the CNG sector in mainland China .000 km of OFC network offering highly dependable bandwidth for telecom service providers Joint venture companies in Delhi. Shell CNG SAE and National Gas Company SAE. GAIL Gas Limited is a limited company under the Companies Act. Hyderabad. GAIL's Business Portfolio includes: 7. Lucknow. is India's flagship Natural Gas company.922 km of LPG Transmission pipeline network with a capacity to transport 3.

Uttar Pradesh. Haryana. As India's leading Natural Gas Major. customers. Andhra Pradesh. GAIL has been the undisputed leader in the marketing. transmission and distribution of Natural Gas in India. Delhi. Maharashtra. In fact. in the 1990s. GAIL sells over 70% (excluding internal usage) of Natural Gas in the country. it has been instrumental in the development of the Natural Gas market in the country. They have adopted a Gas Management System to handle multiple sources of supply and delivery of gas in a co-mingled form and provide a seamless interface between shippers. Gujarat. Madhya Pradesh. transporters and suppliers. . Actively pursuing opportunities in inter-regional gas trade both in the form of Pipeline gas and LNG. Rajasthan.Leaders in Gas Since inception. 41% is to the power sector and 30% to the fertilizer sector. Of this. they supply 60 MMSCMD of Natural Gas from domestic sources to customers across India basis long-term Gas Sales Agreements. Currently. the demand for Natural Gas far outstripped its domestic production. Today. Natural Gas accounts for about 8% of the total primary commercial energy consumption in India. Consumption has grown significantly during the past two decades. They are present in 11 states. i.e.. Tamil Nadu. leading to gas import initiatives and the subsequent development of LNG import projects at suitable coastal locations in Western and Southern India.* Totally. Assam. These customers range from the smallest of companies to mega power and fertilizer plants. and Tripura.

but cannot meet this goal due to low calorific value. land requirement etc. seismic and long gestation period issue. ash disposal. Natural gas is considerably cheaper than naphtha and domestic gas should be first used in existing fertilizer units. thereafter feed the requirement of expansion and new capacity addition. pollution free and impact the population at large. silting. Domestic coal. PRIORITIZATION OF NATURAL GAS FERTILIZER Food security as urea consist of 60% of fertilizer inputs and India must improve the yield per acre as there is no further scope left for increasing the crop acreage . 150 100 50 Gas Demand Projections in power sector (MMSCM D) Gas Demand . Power for all goals is to be achieved and so in the additional power requirement to be created to sustain GDP growth.2.Nuclear power has long gestation and fuel linkage issue. Imported coal is constrained by limited port infrastructure and limitations of the existing cross country transportation by rail (road is not feasible) . Hydel again has serious environment. 400 200 0 Projected Gas Demand for – Fertilizer Sect or 2007-08 2008-09 2009-10 2010-11 2011-12 Urea Production Capacity (Lakh tones) Gas Demand (MMSCMD) POWE R Most versatile form of energy: best in terms of application. although available is large reserves. environmental infrastructural constraints. social cost.

0 2007-08 2008-09 2009-10 2010-11 2011-12 .

14 33. LDO & LSHS ) are expensive and are not environmentally friendly . Further. HSD .Renewable do hold the promise but is not economic and base load power requirement can hardly be met. next best use of domestic gas is in industries – refineries. steel plant petrochemical units. So.37 29. Further.25 31.07 2006-07 2007-08 2008-09 2009-20102010-11 201112 Gas Demand in sponge iron/steel sector Gas Demand . coal meeting the fuel requirement of steel plant has serious environmental issues. yet the economic and high crude oil prices volatilities adversely affected the power economic. Petroleum products (FO & Naphtha) can be an important source for generating power.04 27. INDUSTRIES Purely on economic consideration. the CCGT economic compares most favorable options with power generation based on other fossil fuels. small medium enterprises etc as the alternative fuel ( FO . Gas Demand in Petrochemicals/Refinerie s and Internal Consumption Gas Demand 23. domestic natural gas should next best be used for creating of CCGT plant to meet the additional power requirements.71 25.

42 7.86 2007-08 2008-09 2009-10 2010-11 2011-12 .6 6.87 7.35 6.

CNG may be environmentally friendly .8 15.93 14.08 13. replace LPG by piped natural gas ( LPG should go rural ). Gas Demand in city gas distribution sector Gas Demand 11 12. but with their economic cost of production . if any could be used in CGD network for meeting small industrial / commercial fuel requirements and if possible .certainly not as economical as perceived to be as the indirect costs in terms of conversion have to be factored – in and comparison should not with an already skewed pricing of MS / HSD . The best solution should be to use natural gas for generating additional power requirements for feeding mass rapid transportation system (MRTS) TO decrease “avoidable” per capital energy consumption through cars and personal vehicle.83 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 .CITY GAS DISTRIBUTION (CGD) Surplus domestic gas . the solution for replacement of transportation fuels ( MS / HSD ) should hardly be by CNG.83 12.

Source: oil & gas journal .

Proposal: Jagdishpur-Haldia Pipeline Source: GAIL (INDIA) Ltd .3.

HFC Durgapur. HFC Barauni. CGS Jamshedpur. Jagdishpur-Haldia Pipeline GAIL has already received the authorization in July. The design pressure of pipeline is 99. The gas demand of IFFCO Phulpur will be met through JHPL. The demand assessed for the above pipeline is 32 MMSCMD. JHPL will originate from Haldia and will terminate at IFFCO. 2009 from MoP&NG for laying Jagdishpur-Haldia pipeline. and FCI Gorakhpur. Detail of phases are as follows: Phase-1: (1860 km) Laying Haldia to Phulpur pipeline with spur lines/feeder lines to CGS Kolkata. CGS Betiah. and SAIL Bokaro & Petrochemical Plant Barauni. The pipeline will start from Haldia and terminate at Phulpur. This pipeline shall carry gas from ONGC Mahanadi and KG Basin through Reliance’s Kakinada-Basudevpur-Howrah pipeline. FCI Sindri. it is proposed to implement the above pipeline in phases based on availability of gas from source and gas sourcing tie-up. WBDPC Sagardighi. Jharkhand and West Bengal. WBPDC Katwa. CGS Siwan. Bihar. Based on the above. The authorized capacity for the above pipeline is 16 MMSCMD including 4. CGS Gopalganj. DPL Durgapur. Power Plant Barh. The gas availability from gas supply source as indicated above will be about 30 MMSCMD and gas volume will be build up in phases. Phulpur. CGS Varanasi.93 Kg/cm^2g (98 barg) and arrival pressure of gas at Haldia has been considered 70 kg/cm^2g initially and no gas compression facility has been considered at Haldia in first phase. CGS Allahabad. The design capacity for JHPL in first phase is 16 MMSCMD and which will be augmented in second phase from 16 to 32 MMSCMD. Power Plant Betiah. The design capacity of Haldia to Jagdishpur section in first phase is 16 MMSCMD. Jagdishpur-Haldia pipeline (JHPL) project has been conceptualized to cater to the gas demand of consumers in the states of eastern Uttar Pradesh.0 MMSCMD as common carrier. Hydraulic study for HaldiaPhulpur section has carried out In-House and the optimized size for trunk line is found . Phase-2: (190 km) Installation of Compressor at Haldia with spur lines to CSES Haldia. This will optimize the rout for JHPL and enhance the capacity of existing Auraiya-Jagdishpur section by utilizing Phulpur-Thulendi-Jagdishpur pipeline section for transportation of gas in reverse flow in future. The gas source for the pipeline has been considered KG Basin and ONGC Mahanadi Gas. CGS Ranchi. CGS Patna. WBPDC Bandel. CGS Chapra.4. SAIL Durgapur.

The gas will be boosted from 54 kg/cm^2g to 98 Barg (99.to be 36” diameter.93 Kg/cm^2g) at Haldia compressor station. . The capacity of Haldia to Phulpur pipeline in second phase will be augmented from 16 to 32 MSCMD by installing compressor at Haldia and no intermediate compressor has been envisaged in Haldia-Phulpur section.

Bihar. Mahanadi by ONGC & KG Basin by GSPC. Design pressure of pipeline is 92 kg/cm^2g and has the provision for reverse flow including augmentation of capacity in future by installing intermediate compressors on availability of more gas at Jagdishpur S. Future capacity augmentation after installing intermediate compressor. No intermediate compressor 2. Basic centers enroute pipeline from Haldia to Jagdishpur. Mahanadi by ONGC and KG Basin by GSPC will be from 2012 onwards at Haldia and the total volume of gas available is expected in the . Parameters No spur lines are considered. West Bengal Re-gasified LNG. only tap-off point have been considered at major demand centers enroute Jagdishpur-Haldia pipeline. Lowest transportation tariff. This connectivity will optimize the route for Jagdishpur-Haldia pipeline and enhance in capacity of existing Auraiya-Jagdishpur section and also effective utilization of Phulpur-Thulendi-Jagdishpur pipeline section in reverse flow mode in future. if required. GAIL has signed MoU for formation of JV with ONGC and MoU for Joint Corporation with RIL for natural gas transmission available from ONGC Mahanadi and Reliance gas from KG Basin respectively. 1.The pipeline is designed for 32 MMSCMD. 3. The pipeline diameter is 30” with length of 876 km. Phulpur. Compressor is also envisaged at Jagdishpur for boosting pressure from 54 to 92 kg/cm^2g.No . The gas demand of IFFCO Phulpur will be met through JHPL. Source: GAIL (India) Ltd The gas source for Jagdishpur-Haldia pipeline has been considered as KG Basin by Reliance. Can meet the gas requirement of Jagdishpur customers. Reversal Flow allowed. The availability of gas from KG Basin by Reliance.Pipe Size Name of States covered Products to be transported Delivery Pressure at Phulpur Pressure at Delivery JagdishpurLife Economic Benefits Detail s 800 km 36” Uttar Pradesh. Low Operating cost as compared to other options explored for pipelines. 5. Natural gas 53 kg/cm^2g 45 kg/cm^2g 25 years 1. 4. 6. It is envisaged that this pipeline will originate from Haldia and terminate at IFFCO. 1 2 3 4 5 6 7 8 Parameters Length-Trunk Line Trunk Line. Arrival pressure of gas considered is 54-55 kg/cm^2g. Jharkhand. for transportation & supply of gas at major demand 4.

range of 30 MMSCMD. The gas supply & laying of pipeline from Kakinada to Haldia will be executed by Reliance and MoP&NG has given its authorization for the same to Reliance. .

1 7. Gas Supply Scenario Gas source envisaged & projected available gas volume on the Jagdishpur-Haldia pipeline system is given below: Source 2011-2012 KG Basin 5. 2.1 Mahanadi Gas Total 5. About 9. .01.8 8. industrial & city gas enroute Haldia-Phulpur pipeline. This will be used as a feeder line for supplying Reliance’s KG Basin gas from Kakinada to Haldia. RIL has already been received authorization for laying pipeline in Kakinada.03.07. Bihar & Uttar Pradesh pertaining to fertilizer.75% of the pipeline design capacity. Jharkhand. As per the information gathered the availability of gas from ONGC Mahanadi will be from 2011-2012 onwards. Gas production from Mahanadi Basin is expected to be 20 MMSCMD and will flow through Haldia-Phulpur section to meet the gas demand in the states of West Bengal.Basudevpur-Howrah section.2007 for formation of JV with RIL for natural gas transmission available from KG Basin.8 5 17. Customer Tie-Up GAIL has entered into HoA(s) for gas volume of about 30 MMSCMD enroute HaldiaPhulpur pipelines which is about 93. commercial.2009 with Indian Farmers Fertilizers Corporation Limited (IFFCO) for jointly pursuing for setting up gas based power plant at Betiah.1 0 12.6 10 28.1 Available Gas Volume(MMSCMD) 2012-2013 2013-2014 2014-2015 7.0 MMSCMD gas is expected at Haldia which will flow in HaldiaPhulpur section to cater to the gas demand of some of the consumer enroute Haldia-Phulpur pipeline. List of HoA(s) is placed below. GAIL has signed MoU on 30. RIL’s production from KG Basin D6 block has been started and gas is being produced in phases.4. initially 40 MMSCMD which may go up to 80 MMSCMD. power.0 20 20 29 Availability of gas from KB basin and Mahanadi Gas from KG Basin GAIL has signed MoU on15.6 2015-2016 9. Gas from ONGC Mahanadi GAIL has signed MoU on 24.2007 for formation of JV with ONGC for natural gas transmission available from ONGC Mahanadi.

FCI Gorakhpur and IFFCO Phulpur) are falling enroute Haldia-Phulpur pipeline. FCI Sindri. Availability of about 9.0 MMSCMD Reliance’s KG Basin gas can be distributed to fertilizer plants enroute HPPL.About five fertilizer plants (HFC Durgapur. HFC Barauni. .

15 In(MMSCM D) 2013-2014 201415.Projected gas demand year wise by Marketing is tabulated below: HoA(s)sign Gas ed Volume 2012-2013 Total 8.78 18.99 201724.18 201520.00 Projected demand year wise .58 201622.

CGS Jamshedpur.4. CGS Betiah.2011 / March.86 Sept. WBDPC Katwa.84 Completion date /Commissioning date Phase-1: 16MMSCMD As per Financial appraisal(inclu ding IDC & Margin Money for WC) 6625. CGS Chapra. FCI Sindri. Description of Pipeline system Estimated Cost Rs Cr As per DFR(excludi ng IDC & Margin Money for WC) Laying of pipeline from Haldia to Phulpur along with spur lines /feeder lines to Kolkata.20 11 Phase-2: Capacity 16 to 32 MMSCMD 2.0 Installation of compressor at Haldia along with spur lines to CSES Haldia. HFC Durgapur. WBDPC Sagardighi.32 1. 6163. SAIL Bokaro & Petrochemical Plant Barauni Total 909. DPL Durgapur. CGS Siwan. Project Schedule and Cost Estimate The detailed project schedule of completion of total pipeline system is 42 months from the date of approval of the project (36 months from the date of notification). 3. CGS Patna. CGS Varanasi. CGS Ranchi. FCI Gorakhpur & CGS Allahabad. Power Plant Barh. Power Plant Betiah. HFC Barauni.26 7596. CGS Gopalganj.42 970. S.0 Dec.2013 7073. WBDPC Bandel.No.18 .2012 Dec.

.18 Cr (including IDC and Margin Money for Working Capital) including Foreign Exchange component of Rs 700 Crs.The cost estimate for total project (Phase-1 +Phase-2) is Rs 7596.

Option-3:-36” & 30” pipeline 36” pipeline up to Durgapur tap-off. Delivery pressure at Phulpur is 78kg/cm^2g. Gas Throughput for TransmissionDETERMINATION 2010 5. Benefits/Limitation:No Intermediate Compressor Future capacity augmentation after installing intermediate compressor. Can meet the requirement of Jagdishpur customers. if required. OPTIMAL PIPE SIZE: In order to select an optimal size of a pipeline GAIL can look into three main possibilities mentioned below:Option-1:-36” pipeline with compressor station at Haldia. Highest operating cost. Highest Transport Tariff. Can meet the gas requirement of Jagdishpur customers. Reversal flow Low Operating cost Lowest Transport Tariff Option-2:-30” pipeline with compressor station at Haldia and with Two intermediate compressor stations at 106 km and 206 km. 1. Benefits/Limitation:Two intermediate compressors. It can meet the requirement of 2. one at chainage of 106 km and second at chainage of 226 km. One intermediate compressor at chainage 23 | P a g e .JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF Tariff-JHPL 5.0MMSCMD gas flow of Indo Gulf Fertilizers Jagdishpur. Delivery pressure of Gas at Jagdishpur 45kg/cm^2g. Reversal Flow. & with following configuration:No intermediate compressor Delivery pressure at Phulpuris 53kg/cm^2g It can meet the requirement of Jagdishpur Customers.

Delivery pressure at Phulpur is 86kg/cm^2g.of 351km. 24 | P a g e .

Transport tariff slightly higher compare to Option-1. 36” pipeline size under option-1 was selected as optimal pipeline size for transportation of gas from Haldia to Jagdishpur. The operating cost will also be higher in this case due to boosting of pressure of gas at two locations.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 2010 Benefits/Limitation:One intermediate compressor at chainage of 351 km. High Operating cost. Considering on technical analysis and above mentioned details. 30” pipeline size is limited to capacity up to 30 MMSCMD with two compressors. 24 | P a g e . it is also having potential for further augmenting the capacity of pipeline in future on availability of more gas at Haldia. No reversal flow.

60 km spur line from Durgapur Tap-off (CH-226 km) to HFC Durgapur. 65 km feeder line from Tap-off (CGS Patna) to CGS Chapra. h) City Gas (Kolkata. Chapra. 25 | P a g e . e) 12”. i) 18”. 800 km trunk line from Haldia to Phulpur. WBPDC Sagardighi & Barh Power Plant) g) Industries (SAIL Durgapur. m) 18”. Patna. Siwan. 100 km feeder line from Jamshedpur Tapoff (CH-226 km) to CGS Jamshedpur. WBPDC Katwa. FCI Gorakhpur & DIL Kanpur) f) Power (CESC Haldia. p) 18”. c) 24”. Betiah Varanasi & Allahabad). Proposed Pipeline System DEMAND ESTIMATION & TARIFF DETERMINATION Pipeline system has been designed for meeting the gas demand in various sectors. 70 km feeder line from Kolkata Tap-off (CH-40 km) to CGS Kolkata. f) 12”. a) 18”. 125 km spur line from Sagardighi Tap-off (HFC Durgapur) to WBPDC Sagardighi. o) 12”. l) 18”. k) 18”. q) 12”. 30 km feeder line from Tap-off (CGS Chapra) to CGS Gopalganj. FCI Sindri. 35 km feeder line from Tap-off (CGS Gopalganj) to Power Plant Betiah and CGS Betiah. h) 18”. j) 18”. Ranchi. HFC Barauni. 40 km feeder line from Allahabad Tap-off (CH-770 km) to CGS Allahabad. b) 30”. DPL Durgapur.JAGDISHPUR-HALDIA PIPELINE: 2010 5. Installation of spur lines / feeder lines. d) 12”. Details are given below: e) Fertilizers (HFC Durgapur. Gopalganj. Installation of dispatch terminal at Haldia for transportation and supply of gas to customers’ enroute Haldia-Phulpur. g) 24”. 60 km spur lines from Barauni Tap-off (CH-435 km near GAYA) to CGS Patna Tap-off. 2. 25 km spur line from Sindri Tap-off (CH-286 km) to FCI Sindri. 25 km feeder line from Varanasi tap-off (CH-685 km) to CGS Varanasi. SAIL Bokaro & Petrochemical Plant Barauni). 65 km feeder line from Tap-off (CGS Chapra) to CGS Siwan. WBPDC Bandel. 70 km spur lines from Barh Tap-off (at 20 km up stream of 18” spur line to HFC Barauni) to Barh Power Plant. 140 km spur line from Gorakhpur Tap-off (CH-735 km) to FCI Gorakhpur. Jamshedpur. n) 18”. Phase-1:Installation of 36”. 60 km feeder line from Patna Tap-off (at CH-60 km in 24” spur line to HFC Barauni) to CGS Patna. 70 km spur lines from CGS Patna Tap-off HFC Barauni. 90 km feeder line from Ranchi Tap-off (CH-335 km) to CGS Ranchi.

CGS Varanasi. CGS Betiah. FCI Sindri. Phase-1:(1860 km) Laying Haldia to Phulpur pipeline with spur lines/feeder lines to CGS Kolkata. CGS Patna.Installation of Receiving Terminals (RTs)/Dispatch Terminals (DTs) at customer site and also include City Gate Station for city gas. FCI Gorakhpur & CGS Allahabad. CGS Gopalganj. Power Plant Barh. CGS Ranchi. CGS Siwan. 26 | P a g e . WBDPC Sagardighi. HFC Barauni. CGS Jamshedpur. CGS Chapra. HFC Durgapur.

12".10 + 1.11 0.60 30". 70 km 125 km 100km 90 km 25 km 40 km Demand(MMSCMD) 0.25 2. 40 km 18".50 2.00 0.20 0. 25 km 18". such as DIL.20 1. 800 km 16 2.50 0.) Part-IB: (450 km) Description of Pipeline System in First Phase Pipeline Configuration Part-II: (450 km) Spur lines/Feeder lines • Kolkata City Gas • WBDPC Sagardighi • Jamshedpur City Gas • Ranchi City Gas • Varanasi City Gas • Allahabad City Gas Total 18".10 0. 35 km 18". 30 km 18".11 2. swapped with new gas demand pertaining to Auraiya-Jagdishpur Pipeline.93 kg/cm^2g). 60 km 18".69 Phase-II: (190 km) Phase-2:Installation of compressors at Haldia for boosting pressure from 54 kg/cm^2g to 98 barg (99.20 0.25 17. 140 km Connectivity in existing system Note: The present IFFCO. 60 km 12".11 0.25 0. 70km 12".10 0. 65 km 18". 25 km 24".50 2. Phulpur supply may be.50 0. 24".9). Phulpur Pipeline Configuration Demand(MMSCMCD) 36".2) etc. Kanpur (1. 27 | P a g e .11 1. 60 km 18". 12". SIOE (1.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 Phase-I: (1860 km) Part-I A: (1410 km) Description of Pipeline System in First Phase Part-I: (1410 km) Trunk Line • Haldia –Phulpur Spur lines/Feeder lines • • • • • • • • • • • • HFC Durgapur FCI Sindri CGS Patna tap-off HFC Barauni Barh Power Plant Patna City Gas Chapra City Gas Siwan City Gas Gopalganj City Gas City Gas & Power Plant at Betiah FCI Gorakhpur IFFCO. 12". 12".

0 km 12".00 4. 85 km spur line from Tap-off (CH-40 km) to WBPDC Bandel.50 2.07 1.45 1. 15 km spur line from Barauni Tap-off (HFC Barauni) to Petrochemical Plant Barauni. Installation of Receiving Terminals (RTs) / Dispatch Terminals (DTs) Description of Pipeline System in Second Phase Pipeline Configuration Haldia-Phulpur section Compressors • Installation of Compressor at Haldia Spur lines/Feeder lines CSES. 85 km 18". 55 km 18". Haldia • Kolkata City Gas • WBPDC Bandel • WBDPC Katwa • Durgapur Projects Ltd. • SAIL Durgapur & Durgapur City Gas • SAIL Bokaro • Petrochemical Plant Barauni • Varanasi City Gas • Allahabad City Gas Total Demand(MMSCMD) 24".JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 Installation of spur lines / feeder lines.00 0. 10 km spur line Bokaro Tap-off (CH-335 km) to SAIL Bokaro f) 12”. 15 km Covered in PH-I 18". 5. 10 km 12". b) 18”.47 28 | P a g e . c) 18”. Part-II 4. 5. Part-II Covered in PH-I.25 18. 5 km spur line from Tap-off (HFC Durgapur) to SAIL Durgapur.0 km 12". e) 12”. 55 km spur line Tap-off (WBPDC Sagardighi) to WBPDC Katwa. 15 km Covered in PH-I.50 1.2* 1.50 0. a) 18”.00 2. 15 km spur line Tap-off to CSES Haldia. d) 12”.

JAGDISHPUR-HALDIA PIPELINE: Source: GAIL (India) Ltd DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 29 | P a g e .

The capacity utilization has been assumed as 60%. Capital employed includes Capex for pipelines besides Margin Money for working capital.70%.tax) and pre-tax return on capital employed has been computed by grossing up 12% which works out to 18. The economic life of the project has been considered as 25 years of operations in case of first phase.80%.90%. The levelized tariff has been arrived based on the ‘Discounted cash Flow(DCF) methodology’ equating the inflows from the projected revenue earnings out of natural gas pipeline tariff with the outflows of the capital and operating expenditures over the economic life of the project by discounting these flows at the project’s reasonable rate of return(viz. PROJECT COST The financial appraisal of pipeline along with their spur/feeder lines has been carried out along with tariff calculations as per PNGRB tariff regulations guidelines. Levelized tariff has been calculated for Main Trunk Line and Spur Lines up to 50 Kms range of Main Line (put together) and thus corresponding capital cost.18. 28 | P a g e .2 . Details of methodology followed for arriving for Jagdishpur-Haldia pipeline along with spur lines as per PNGRB guidelines are given below. The rate of return on capital employed has been considered as 12% (post. The total capital employed includes working capital (equal to 30 days of operating costs and 18 days of receivables) which has been considered for calculating tariff. receivables and working capital have been considered together for arriving at the Levelized tariff.18%. operating cost.18% pre-tax).JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 2010 6.3 . Line Pack and interest during construction (IDC). JHPL tariff has been determined considering a reasonable rate of return on normative level of capital employed plus a normative level of operating expenses in natural gas pipeline.100% in st nd rd th th 1 .4 & % 5 year of operations and thereafter respectively.

4 6 2278.54 7596.26Cr including foreign exchange component of Rs 726. The detailed cost estimate worked out to be Rs 7073. 85 Total 911.23 911.54 4253.27Cr.4 1276.7 0 1063.0 7 5317.60% of throughput 12% Year 2009-10 2010-11 2011-12 2012-13 Total Deb t 638.0 2977.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 The major factor/assumption considered in the Financial Appraisal are as follows: Debt: Equity Long Term Debt Interest Rate 10.18 Cost Estimate & Operating Cost A detailed Capital Cost estimate (Capex) & Operating Cost (Opex) have been prepared for the proposed pipeline system for transportation of gas to meet the gas demand of consumers and proposed city gas projects enroute JagdishpurHaldia Pipeline. details are given below:29 | P a g e .4 6 638.25% Moratorium Term of loan including moratorium years Income Tax Rate 33. 33 Equit y 273.861 1519.7 7 273.99% Volume Build Up st 1 year nd 2 year rd 3 year th 4 year th 5 year Project life Unaccounted Gas Project IRR (Post-Tax) on capital employed as per PNGRB guidelines Capital Outflow 70:30 1 year 10 60% 70% 80% 90% 100% 25 years 0.1 6 455.

2 0 47.1 1 139.9 0 93.9 5 6163.2 2 244.0 9 5874.5 4 49.37 .83 330.66 6.46 14.7 1 29.86 289.7 7 331.59 4.3 8 115.2 7 99.0 4 75.8 1 111.8 9 99.Capex (Rs Crores) Phase1:16MMSCMD S.7 5 52.54 4.82 4.64 9.99 8.0 4 243.8 4 12.No Descripti on Estimated Cost (Capex) (Rs Ic Fc 138.9 5 311.7 4 39.44 28.37 5.1 1 86.8 6 79.49 15.75 30.97 5.82 19.83 44.5 2 82.21 13.1 9 257.71 5.34 Total Cost (Rs Crores) 1 2 Pipeline System: Haldia to Phulpur Pipeline Spur lines/Feeder Lines to: CGS Kolkata HFC Durgapur WBPDC Sagardighi CGS Jamshedpur FCI Sindri CGS Ranchi HFC Barauni Power Plant Barh CGS Patna CGS Chapra CGS Siwan CGS Gopalganj Power Plant & CGS Betiah CGS Varanasi FCI Gorakhpur CGS Allahabad Total 4076.47 126.3 1 35.6 8 57.4 1 34.77 3937.83 229.2 9 344.97 12.60 5.15 104.3 2 67.

4 0 7073.80 436.79 32.7 3 17.82 7.64 15.27 135.Phase-2:-Augmentation of capacity from 16 to 32 MMSCMD S.77 11.5 6 8.36 10.61 42.79 4.99 .6 3 23.99 7.3 5 13.7 2 21.2 1 10.1 4 105.No Descripti on Estimated Cost (Capex) (Rs Ic Fc 379.99 3.4 0 16.32 97.5 7 909.1 7 28.7 7 472.94 Total Cost (Rs Crores) 1 2 Pipeline System: Compressor Haldia Spur Lines/Feeder Lines to: CSES Haldia WBPDC Bandel WBPDC Katwa DPL Durgapur SAIL & CGS Durgapur SAIL Bokaro Petrochemical Plant Barauni Total 515.6 1 159.2 6 Grand Total(Phase-1 +Phase-2) 726.2 5 148.27 6346.

7 5 52.9 0 93.37 5.21 13.2 9 344.0 4 75.1 1 86.5 4 49.95 4.47 126.0 4 243.44 28.83 44.43 1.21 2.83 229.49 15.7 1 29.3 5 2.46 14.86 289.54 6.2 2 244.7 7 331.60 5.25 0.4 1 34.64 9.No Descripti on Estimated Cost (Capex) (Rs Ic Fc 138.94 6.97 12.74 1.6 8 57.08 2.0 9 5874.76 1.18 1 2 Pipeline System: Haldia to Phulpur Pipeline Spur Lines/Feeder Lines to: CGS Kolkata HFC Durgapur WBPDC Sagardighi CGS Jamshedpur FCI Sindri CGS Ranchi HFC Barauni Power Plant Barh CGS Patna CGS Chapra CGS Siwan CGS Gopalganj Power Plant & CGS Betiah CGS Varanasi FCI Gorakhpur CGS Allahabad Total 4076.94 2.8 9 99.1 1 139.8 1 111.63 4.54 4.77 3937.34 Total Cost (Rs Crores) Ope x (Rs Cr/Annum) 69.99 8.3 2 67.9 5 6163.97 5.2 7 99.9 5 311.7 4 39.66 6.15 104.82 19.Operating Cost(Rs Crores/Annum) Phase-1:16MMSCMD S.3 8 115.12 0.59 4.3 1 35.1 9 257.5 2 82.83 330.8 6 79. 84 12.37 .17 1.75 30.2 0 47.82 4.60 1.21 1.71 5.

6 6 1 2 Pipeline System: Compressor Haldia Spur line/Feeder Lines to: CSES Haldia WBPDC Bandel WBPDC Katwa DPL Durgapur SAIL & CGS Durgapur SAIL Bokaro Petrochemical Plant Barauni 515.48 3.1 7 28.32 97.16 Grand Total(Phase-1 +Phase-2) 726.79 32. 26 1.94 Total Cost (Rs Crores) Ope x (Rs Cr/Annum) 147.25 148.99 7.61 Total 42.43 1.1 4 105.26 2.64 15.27 135.26 1.77 472.73 17.36 10.Phase-2:-Augmentation of capacity from 16 to 32 MMSCMD S.99 Source: GAIL (India) Ltd .40 16.6 3 23.79 4.56 8.2 1 10.80 436.3 5 13.4 0 7073.7 2 21.27 6346.77 11.No Descripti on Estimated Cost (Capex) (Rs Ic Fc 379.18 1.99 3.6 1 159.5 7 909.82 7.04 1.

53 141. 92 2149. 28 153. 92 2149. 20 99. 75 47. 37 21. 28 2. 2. 56 15. 45 84. 94 33. 92 19.---1289. 19 59. 25 2. 44 35. 79 2395. compressor valves & accessories. 20 2. 28 153. 99 2662. utility items. 68 37. 19 59. 53 141. 07 18. 92 19. Capital Expenditure The capital expenditure of the project is computed based on the cost estimates provided by the GAIL technical team. Cost of Compressor: Total cost of the compressor is computed at Rs 490. scrubber. compressor piping. The revenues for the project life are based on the estimated tariff/MMBTU. 12 26. 87 21. 29 122. fuel gas conditioning skid. 74 15. 16 28. 48 29. 47 53. 38 21. Following table indicates revenue details of the project till year 10. 06 17. 37 21. 28 153. 22 127. 00 0. following table gives year wise revenues till year 10 for trunk line and spur lines which are above 50 km in length. 26 91. 59 2129. 44 35. 19 59. 33 17. 42 37. 92 2149. 12 26. 28 153. 92 10. 99 2662. 12 26. 55 11. 99 2662. 92 19. 27 26. 19 1597. 06 17. 62 137. 70 23.JAGDISHPUR-HALDIA PIPELINE: 2010 7. 37 21. 06 17. 42 37. 53 141. 37 21. 92 19. 91 141. 24 13. 99 2662. 44 35. 37 21. 62 13.WBPDC Sagardighi WBPDC-Katwa CGS Patna to Betiah WBPDC-Bandel HFC Barauni to Barah CGS Kolkata CGS Ranchi FCI Gorakhpur CGS Jamshedpur Total Revenue Volume MMSCM D 28. 53 141. 37 21. 95 153. 92 19. 11 1. 19 59. 92 19. 94 1934. 03 41. 53 26. 92 2149. 00 3. 95 1504. 84 Crores which includes compressor cost. 39 1863. 31 35. compressor cooler. Revenue Details of Pipeline Trunk line and Spur lines which are under the corridor of 50 km range HFC Durgapur-SAIL Durgapur-DPL Durgapur. 93 2149. 43 12. 49 17. 15 15. 92 2149. 12 7. Total Revenues Revenue details of the trunk line and other spur line has been arrived on the demand estimated provided by technical team of GAIL (India) Ltd. 1. compressor station construction cost . 95 1719. 06 17. 12 26. 44 35. 51 25. and PNGRB guidelines of capacity utilization. 28 153. 42 113. 14 13. 44 35. 44 35. 43 10. 34 | P a g e . 42 37. 61 2. 92 15. 19 59. 00 Year1 Year2 Year3 Year4 Year5 Year6 Year7 Year8 Year9 Year10 ------------------------------------------------------------Rs Cr----------------------------------------------------------------------------. 06 17. 53 141. 97 107. 80 32. 12 26. 42 37. 42 37. 43 19. electrical & instrumental items. fitting and equipment. 06 17. 00 2. 00 22. 19 59. 99 2662. 99 2662. PROJECT FINANCIALS DEMAND ESTIMATION & TARIFF DETERMINATION 7.

Below mentioned table provides phase wise details of capital expenditure: 35 | P a g e .

No. 74 1767. 20 Phase-2 0. 3. 84 126. 36 335. 28 1. Operating Expenditure: Operating cost required for the operation and maintenance of the project of the proposed Jagdishpur. 80 3. 35 Total (Rs. 00 Power (75KW) 1. 35 51. 00 10.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 2010 Particulars Haldia to Phulpur Pipeline Compressor Survey Land and ROW PMC Plant & Machinery Owners Expenses Contingencies Line Pack TOTAL Total Interest during construction capital Total working margin Total GRAND TOTAL Phase-1 3974. 36 Phase-2 0. 0. 72 10. 00 0. 1 2 3 4 5 6 7 8 9 10 TOTAL Description Trunk line Compressor Repair & Maintenan ce Manpower Total Operating expenditure Total Phase-1 86. 33 60. 00 O&M Contract 0. 73 140.Haldia Pipeline Project over its economic life is computed and following table provides costs for various functional heads in phased manner. 20 00 00 93 20 00 41 In 9. 33 7. 68 877. 00 0. 17 10. 20 Security 0. 00 Insurance 11. 00 0. 0. 40 30. 84 86. 14 0. 0. 74 60. 71 720. 00 36. 38 5. 00 490. 3. 38 0. 84 0. 91 6014. 89 8. 00 0. Crore S. 59 6891. 13 10. 14 281. 97 54. 00 5. 13 140. 15 25. 74 96. 69 65. 10 115. 36 18. 98 9. 61 54. 93 35 | P a g e . 84 6. 47 745. 00 126. 60 6. 96 Overheads of GAIL 9. 03 6. 1. 20 Fuel cons 0. 62 7637. 0. 74 2103. Crs) 3974. 14 490.

Methodology for DEMAND ESTIMATION & TARIFF DETERMINATION Tariff Calculation 2010 The natural gas pipeline tariff shall be determined by considering a reasonable rate of return on normative level of capital employed plus a normative level of operating expenses in the natural gas pipeline The unit rate of natural gas pipeline tariff to be charged for a period shall be the calculated based on the Discounted Cash Flow ”DCF” methodology considering the reasonable rate of return as specified in the regulation to be considered as projects internal rate of return. Year of Natural Gas Pipeline Utilization First Second Third Fourth Fifth Percentage Utilization 60% 70% 80% 90% 100% The divisor for the sixth and the subsequent years of operations of the natural gas pipeline be equal to one hundred percent of the sum of the capacity requirement of the entity or the actual volume of the natural gas transported on common carriers 36 | P a g e . The volumes of natural gas to be considered as divisor in the determination of unit natural gas pipeline tariff over the economic life of the project shall be computed on a normative basis as indicated below. The rate of return on capital employed once applied to a natural gas pipeline project shall remain fixed for the entire economic life of the project. The divisor for each of the first five years of operation of the natural gas pipeline shall be arrived by multiplying the applicable percentage utilization for the year. The rate of return on capital employed shall be the rate of return on capital employed equal to percentage post-tax.JAGDISHPUR-HALDIA PIPELINE: 7. with the sum of the capacity requirement of the entity and the firmed up contracted capacity with other entities as specified under the PNGRB Regulations 2008. as per the basis indicated below. The total capital employed shall be equal to the grossed fixed assets in the project less accumulated depreciation plus normative working capital (equal to thirty days of operating cost excluding depreciation and eighteen days of natural gas pipeline receivables). 4.

the line wise transportation for 12% (post-tax) return on capital employed are given in the following table: 37 | P a g e . the subsequent capital cost and the profitability projections.Considering the present project configuration.

24 3139. HFC Transportation Tariffs for Spur lines Description Transportation Tariff (Rs/MSCM) (INR/MMBTU) Base Case: Gas volume.24 MMSCMD.51 545.37 16.50 24.90 10. WBPDC Bandel.01 38 | P a g e .90 68. 83.51 683.1 Line 42 5 (Haldia to Phulpur) and spur lines /feeder lines within and up to 50km (CSES Haldia. 5. HFC Durgapur.22 363.10 94.37 363. excluding 8 MMSCMD as common carrier Tariff for spur lines/feeder lines to beyond 50 km Spur lines to: -CGS Kolkata -WBPDC Bandel -HFC Durgapur -SAIL Durgapur -DPL Durgapur -WBPDC Sagardighi -WBPDC Katwa -CGS Jamshedpur -CGS Ranchi -HFC Barauni -PE Plant Barauni -Power Plant Barh 348.49 16. Transportation Tariffs for Trunk Lines Description Transportation Tariff (Rs/MSC (INR/MMBTU) M) Base Case: Gas volume.37 16.23 803. CGS Jamshedpur.06 545.03 483.76 10. CGS Ranchi.76 2266.22 363.90 10.01 68.22 2266.37 16.51 545.51 545.44 14.37 20. SAIL Bokaro. excluding 8 MMSCMD as common carrier Tariff for mainline and spur lines within the corridor up to 50 km Main Trunk 2771.19 10.24 MMSCMD.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 7. FCI Sindri.

65 107.16 83.66 2771.24 (Conversion Factor: 33.65 3574.64 99.16 151.3330 for CV of 84.05 94.16 151.78 3134.42 2771.76 Betiah -FCI Gorakhpur 1029.76 -CGS Betiah 2266.15 177.18 5038.42 5910.18 5038.64 3134.42 3119.42 3800.52 99.64 3134.01 68. 00 Levelized Transportation tariff 68.15 83.93 3454.15 114.03 83.16 151.93 3316.18 5038.59 97.25 83.18 5038.01 30.01 68.52 103.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 -CGS Siwan 2266.42 CSES Haldia CGS Kolkata WBPDC Bandel HFC Durgapur SAIL Durgapur DPL Durgapur WBPDC Sagardighi WBPDC Katwa CGS Jamshedpur FCI Sindri SAIL Bokaro CGS Ranchi HFC Barauni Petrochemical Plant Barauni Power Plant Barh CGS Patna CGS Chapra CGS Siwan CGS Gopalganj CGS Betiah Power Plant Betiah CGS Varanasi FCI Gorakhpur CGS Allahabad The Levelized Tariff in respect of the consumers(trunk line tariff/zonal tariff + customer connectivity tariff) of Dabhol-Bangalore pipeline for 12% project IRR on capital employed(at.05 151.52 99.93 3316.18 5038.93 3316.16 151.15 2771. 1USD=48) Description of Consumers Transportation Tariff (Mainline with tariff of spur line up to 50 km /Mainline tariff and additional tariff for spur lines beyond 50 km) Transportation Tariff (Rs/MSCM) (INR/MMBTU) 83.8400 kcal/SCM) as per PNGRB 39 | P a g e .16 151.88 kcal/SCM.52 99.01 68.15 93..76 -CGS Gopalganj 2266.48 3316.34 94.18 2771.64 5038.76 -Power Plant 2266.45 3254.66 2771.05 94.

JAGDISHPUR-HALDIA PIPELINE: guidelines are given above.

DEMAND ESTIMATION & TARIFF DETERMINATION

201 0

40 | P a g e

Applicable transportation tariff for pipeline for consumers enroute Haldia-Phulpur pipeline will be in the tune of 83.15-177.34 INR/MMBTU, as tabulated above and the tariff applicability will be subject to approval of the regulatory authority. Marketing group confirms that the above tariff is applicable to gas consumers and contract will be executed at this tariff. The committee deliberated on tariff, it has emerged that presently tariff has been worked out for 24 MMSCMD without considering common carrier gas volume i.e.8 MMSCMD. The tariff calculated above will proportionally reduce on availability of common carrier gas volume for transportation.

.

JAGDISHPUR-HALDIA PIPELINE:

DEMAND ESTIMATION & TARIFF DETERMINATION 8. MEANS OF FINANCE

2010

The project is proposed to be funded by term loans from Banks/Financial Institutions and equity contribution from internal resources in the ratio of 70:30. The proposal means of finance for the project will be as under Means of Finance Means of Finance Total Rupee Term Loan proposed @ 70% 5346. 13 Promoter’s Contribution through Internal 2291. 20 accruals @ 30% TOTAL 7637. 33 Equity Contribution: The total amount of promoter’s contribution for the proposed expansion project is estimated at Rs. 2291. 20 Crores, which can be met from internal accruals. Term Loan The company proposes to raise Rupee term loans to the extent of Rs. 5346. 13 Crores from Banks & Financial Institutions to part finance the project. The broad terms of the proposed loan is as given below Nature of borrowing Loan Amount Interest Rate Moratorium period Tenor Installments per year Free Cash Flow Available Based on the cash flow projection of GAIL for the next five years the free cash flow available with GAIL for future projects has been arrived as detailed below (Assuming Debt Equity Ratio of 70:30). Rupee term Loan Rs. 5346. 13 Crore 10. 25% 1 year 8 years 4

40 | P a g e

JAGDISHPUR-HALDIA PIPELINE:

DEMAND ESTIMATION & TARIFF DETERMINATION

201 0

Free Cash Flow
S. No. 1. Particulars Funds Available Total Capex Pipeline Project(Future Project ) 2. 3. 4. 5. 6. 7. 8. Total Capex (Excluding future Pipelines) 2009-10 5624 7957 553 7404 2010-11 2011-12 2012-13 2013-14 2980 9605 2463 7142 3185 11412 6405 5007 3027 7377 5310 2067 2676 3509 1905 1604

Fund Commitment for equity excluding future Projects 481. 2 Availability of funds for future projects 3402. 80 Requirement of fund for future project(JHPL) 278. 78

2221. 20 2142. 60 1502. 02 620. 10 837. 40 1682. 90 2406. 90 2194. 8 274. 52

1321. 92 584. 83 278. 78

Cumulative Availability of funds for future projects 8330. 00 Cumulative Requirement of funds for future projects 2460. 05 Surplus after meeting fund for future projects 3124. 02

3402. 80 4240. 20 5923. 10 1600. 70 2185. 53 2639. 50 3737. 57 5869. 95

Source: GAIL (India) Ltd.

It is observed that GAIL has sufficient cash to meet its equity obligation for the proposed JHPL project. However GAIL have other pipeline projects which are in process of approvals, it is therefore recommended to have check on the fund availability for its equity contribution before the projects commissioned.

Source: GAIL (India) Ltd

41 | P a g e

however based on prevailing gas demand and gas availability scenario. Further no escalation has been considered.5% 8.25% 70:30 2 years of commissioning of 25 years 33.a. Total Line pack of Rs.00% CD in Cess 25.3% 4. 10. Straight line method 720.91 Croreg 42 | P a e . 8. the design capacity for JHPL in first phase will be 16 MMSCMD and which will be augmented in second phase from 16 to 32 MMSCMD.60% Statutory and Indirect costs including taxes and duties Parameter Values Ocean Freight Inland Insurance Port handling charges Excise duty Service tax WCT Basic custom duty + additional No. Basic Assumption Broad Assumptions: Capital cost estimates for Jagdishpur-Haldia pipeline project system have been provided by technical consultants of GAIL and as on 2010. Construction Period Interest rate on loans Debt: Equity ratio Moratorium period project life Project Corporate tax Depreciation method IDC Unaccounted gas 36 months 10. However appropriate inflation has been taken into account for overall project development.24% 10. the capacity of this pipeline is 16 MMSCMD (which is inclusive of 4 MMSCMD for common carrier). Line Pack: Line pack has been estimated by GAIL and technical consultants of GAIL for JHPL project.58% 365 Design Capacity: As per authorization.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 9. of working days Corresponding 5% 1% 1.59 Crore has been considered with Rs.17% p.15 0.99% 3.

68 Crore in Phase-2. Line pack has been considered as part of capital cost and assumed to be financed in the same proportion as the capital cost.JAGDISHPUR-HALDIA DEMAND ESTIMATION & TARIFF 201 PIPELINE: DETERMINATION 0 in Phase-1 and Rs. 43 | P a g e . 1.

the operational life of the project has been considered as 25 years from the date of commencement of commercial operations. Salvage value: The salvage at the end of 25 years has been assumed.84 Crore has been considered on the present cost of compressor for 15 years. Depreciation Rates: Depreciation has been considered at 3. Operational life of project: For the purpose of profitability projection. Fixed Operating Costs: Fixed operating expenses like: salaries & wages. Escalation in operating costs: The operating costs have been escalated at 5% per annum during operations period to account for any increase due to inflation and other factors.6% of the annual throughput has been assumed towards Unaccounted Gas Losses. insurance. repairs and maintenance. Income tax Rates: Income tax estimation is based on corporate tax of 33. Plan & Administrative overheads. For working capital it has been assumed at 100% and total line pack is added into total salvage value.17% (including for compressor) and straight line method has been used to compute the depreciation.99% Conversion Factor for transportation tariff 1 MMBtu CV 1 MMBtu 1 MMSCMD 251996 8400 28 35715 kCal kCal/ SCM SCM MMBtu 44 | P a g e . Compressor replacement: A provision of RS 490.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 Unaccounted Gas Losses: A provision of 0. Variable Costs: Various variable costs incurred due to JHPL project has been considered.

720 1.505 512 993 386 1.505 1.656 252 14 1. Separate profitability details have been provided for Main line and Spur Lines  Revenue Opex Key Project Financials for Trunk line till Year 10 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 1.99% PAT 172 2 868 417 8 443 443  HFC Durgapur-SAIL Durgapur-DPL Durgapur-WBPDC Sagardighi Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 92 107 123 138 153 153 153 153 153 153 12 12 95 12 1 82 34 1 47 7 13 110 12 1 96 32 1 64 15 14 124 12 1 111 28 1 82 23 14 139 12 1 126 24 1 101 31 15 138 12 1 125 19 1 105 33 16 137 12 1 124 15 1 108 35 16 137 12 1 123 11 1 111 37 18 136 12 1 122 7 1 115 39 18 135 12 1 122 3 1 118 41 Revenue Opex Operating Margin 80 Depreciation Amortization EBIT Interest on Term Loan Interest on WC loan PBT Tax(@)33.243 172 2 1.150 2.150 248 262 1.845 172 2 1.042 Depreciation Amortization EBIT Interest on Term Loan Interest on WC loan PBT Tax(@)33.467 489 978 368 1.471 361 12 1.429 464 965 351 1.645 172 2 1.10.608 89 14 1.390 437 953 335 1.150 2.150 10 2.830 172 2 1.444 172 2 1270 416 11 844 193 651 290 1.671 307 13 1.541 533 1.935 2.624 143 14 1.350 407 943 320 1.150 2.290 1.Profitab ility JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 2010 Analys is Below mentioned tables would provide estimated profit margins for the proposed project.782 172 2 1.799 172 2 1.150 2.590 34 14 1.008 Operating Margin 1.069 436 9 624 91 533 276 1.99% 12 1 67 32 1 34 - 44 | P a g e .641 198 14 1.098 302 796 305 1.764 172 2 1.815 172 2 1.

PAT 34 40 49 59 70 72 73 74 76 77 45 | P a g e .

99% PAT 11 1 62 30 0 32 0 32 13.453 36.99% PAT 3 0 16 8 0 8 8  CGS Patna to Betiah Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 85 99 113 127 142 142 142 142 142 142 11 11 88 11 1 76 31 1 44 6.906 37 12 101 11 1 89 30 1 59 12 115 11 1 103 26 1 76 13 129 11 1 116 22 1 94 14 128 11 1 116 18 1 97 14 127 11 1 115 14 1 100 15 126 11 1 114 10 1 103 16 126 11 1 113 6 1 106 17 125 11 1 113 2 1 109 37.19 45 55 65 66 67 69 79 .371 30.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0  Revenue Opex WBPDC-Katwa Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 22 26 30 34 37 37 37 37 37 37 3 3 23 3 0 20 8 0 12 2 10 3 27 3 0 24 8 0 16 4 12 3 30 3 0 27 7 0 20 6 15 4 34 3 0 31 6 0 25 8 17 4 34 3 0 31 5 0 26 8 17 4 34 3 0 30 4 0 26 9 18 4 33 3 0 30 3 0 27 9 18 4 33 3 0 30 2 0 28 10 18 5 33 3 0 30 1 0 29 10 19 Operating Margin 20 Depreciation Amortization EBIT Interest on Term Loan Interest on WC loan PBT Tax(@)33.773 21.585 34.565 32.191 28.813 5 72 Revenue Opex Operating Margin 74 Depreciation Amortization EBIT Interest on Term Loan Interest on WC loan PBT Tax(@)33.

9281 5.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0  WBPDC-Bandel Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 16 19 21 24 26 26 26 26 26 26 2 2 16 2 0 14 6 0 8 3 19 2 0 17 5 0 11 3 21 2 0 19 5 0 14 3 24 2 0 22 4 0 17 3 24 2 0 22 3 0 18 3 23 2 0 21 3 0 18 3 23 2 0 21 2 0 19 3 23 2 0 21 1 0 20 4 23 2 0 21 0 0 20 Revenue Opex Operating Margin 14 Depreciation Amortization EBIT Interest on Term Loan Interest on WC loan PBT Tax(@)33.99% PAT 2 0 12 5 0 6 0 6 1.6484 6.2935 2.2522 5.6454 6.5606 3.99% PAT 3 0 15 7 0 8 8 .0064 6.3395 6.9362 9 7 8 10 12 12 12 13 13 13  HFC Barauni to Barah Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 22 25 29 32 36 36 36 36 36 36 3 4 21 3 0 19 8 0 11 2 9 4 25 3 0 22 7 0 15 4 11 4 28 3 0 26 6 0 19 5 14 4 32 3 0 29 5 0 23 7 16 4 32 3 0 29 4 0 24 8 17 5 31 3 0 29 3 0 25 8 17 5 31 3 0 28 2 0 26 9 17 5 31 3 0 28 2 0 26 9 17 5 31 3 0 28 1 0 27 9 18 Revenue Opex Operating Margin 19 Depreciation Amortization EBIT Interest on Term Loan Interest on WC loan PBT Tax(@)33.

JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0  Revenue Opex CGS Kolkata Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 11 13 15 17 19 19 19 19 19 19 2 2 11 1 0 10 4 0 6 1 5 2 13 1 0 12 4 0 8 2 6 2 15 1 0 13 3 0 10 3 7 2 17 1 0 15 3 0 12 4 9 2 17 1 0 15 2 0 13 4 9 2 17 1 0 15 2 0 13 4 9 3 16 1 0 15 1 0 13 4 9 3 16 1 0 15 1 0 14 5 9 3 16 1 0 15 0 0 14 5 9 Operating Margin 9 Depreciation Amortization EBIT Interest on Term Loan Interest on WC loan PBT Tax(@)33.99% PAT 1 0 8 4 0 4 4 .99% PAT 1 0 8 4 0 4 4  CGS Ranchi Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 10 12 14 15 17 17 17 17 17 17 1 1 11 1 0 10 5 0 5 1 4 2 12 1 0 11 4 0 7 2 5 2 13 1 0 12 3 0 9 3 6 2 15 1 0 14 3 0 11 3 8 2 15 1 0 14 2 0 12 4 8 2 15 1 0 14 2 0 12 4 8 2 15 1 0 14 1 0 12 4 8 2 15 1 0 14 1 0 13 4 8 2 15 1 0 14 0 0 13 5 9 Revenue Opex Operating Margin 9 Depreciation Amortization EBIT Interest on Term Loan Interest on WC loan PBT Tax(@)33.

JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0  FCI Gorakhpur Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 36 42 48 53 59 59 59 59 59 59 4 5 37 5 0 32 13 0 19 3 16 5 43 5 0 38 13 0 25 6 19 5 49 5 0 43 11 0 32 9 23 5 54 5 0 49 9 0 40 12 28 5 54 5 0 49 8 0 41 13 28 6 54 5 0 49 6 0 42 14 29 6 54 5 0 48 4 0 44 15 29 6 53 5 0 48 3 0 45 15 30 6 53 5 0 48 1 0 46 16 30 Revenue Opex Operating Margin 32 Depreciation Amortization EBIT Interest on Term Loan Interest on WC loan PBT Tax(@)33.99% PAT 2 0 9 4 0 5 5 .99% PAT 5 0 27 13 0 14 14  CGS Jamshedpur Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 13 15 18 20 22 22 22 22 22 22 2 2 13 2 0 11 4 0 7 1 6 2 16 2 0 14 4 0 10 2 8 2 18 2 0 16 4 0 12 3 9 2 20 2 0 18 3 0 15 5 10 3 19 2 0 17 2 0 15 5 10 3 19 2 0 17 2 0 15 5 10 3 19 2 0 17 2 0 15 5 10 3 19 2 0 17 1 0 16 5 11 3 19 2 0 17 0 0 17 6 11 Revenue Opex Operating Margin 11 Depreciation Amortization EBIT Interest on Term Loan Interest on WC loan PBT Tax(@)33.

597 1.130 2.178 372 2.99% PAT 212 5 1.290 212 5 2.839 614 1.234 212 5 2.059 212 5 1.208 408 2.841 454 15 1.091 524 9 557 557 It is observed that if the project is executed as per the time lines defines and if GAIL secures itself with marketing and distribution of the gas to defined capacity then the estimated profit margins can be met easily.888 643 1. Below mentioned picture reflects the projected profit margin for 10 years from the commissioning of the project.739 547 1.662 2.226 428 2.213 212 5 1.396 2.308 Depreciation Amortization EBIT Interest on Term Loan Interest on WC loan PBT Tax(@)33.245 449 2.662 289 304 1.272 212 5 2.192 390 2.809 212 5 1.266 Revenue Opex Operating Margin 1.055 248 17 1.341 548 11 782 116 666 320 1.373 378 994 355 2.036 180 17 1.688 510 1.016 111 17 1.662 2.863 2.662 10 2.073 317 17 1. Profit After Tax (PAT)Combined P&L PAT in Rs Crore 1600 1400 1200 1000 80 0 60 0 400 200 PAT in Rs Crore .JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0  Combined P&L Account Statement Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 1.592 522 13 1.790 582 1.056 243 814 337 2.308 212 5 2.995 43 17 1.254 212 5 2.662 2.559 212 5 1.935 669 1.090 385 16 1.662 2.

JAGDISHPUR-HALDIA PIPELINE: 0 Year 1 Year 2 Year 3 DEMAND ESTIMATION & TARIFF DETERMINATION Year 4 Year 5 Year 6 Year 7 Year 8 201 0 Year 9 Year 10 .

95% 27.00% 34.43% 34.24% 12.00% CGS Jamshedpur 17.00% CGS Patna to Betiah 17.46% 27.78% Post-Tax 12.00% HFC Barauni to Barah 17.00% 34.21% 34.62% 34. .19% 12.18% 26.00% WBPDC Bandel 17.23% 12.08% 26.41% 34.22% 12.20% Project IRR Project IRR Equity IRR Pre-Tax Trunk line and Spur lines which are under the corridor of 50 km Post-Tax range 35.36% 12. Projected Financial Equity IRR Pre-Tax 17.00% FCI Gorakhpur 17.15% 27.21% 12.00% CGS Kolkata 17. 12% post IRR for the project has been fixed throughout all the spur lines and Main line to arrive at the tariff.20% HFC Durgapur-SAIL Durgapur-DPL Durgapur-WBPDC Durgapur 27.00% As per the PNGRB Guidelines.53% 34.67% 34.09% 27.00% CGS Ranchi 17.19% 12.95% WBPDC Katwa 17.02% 26.81% 17.22% 12.61% 35.40% 27.95% 27.25% 12.

Threat: 1. 2. There is a steady growth in demand for petroleum products. GAIL is subject to threat of subsidy and pricing policy of ministry of petroleum and natural gas. 2. GAIL has to meet all their statutory requirements before a commencement of commercial operations. 4. GAIL is supported by Government of India. GAIL has the obligation to work within the parameters of the policies and directions of the Government of India. Weakness: 1. GAIL has market share of around 80% in natural gas market. As a Public Sector Organization. SWOT 2010 ANALYSIS Strengths: 1. Pipelines projects can be leveraged for telecom business. 2. 6.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 11. 2. GAIL is also present in overseas for exploration business. There is potential in cross country pipeline business. Raise in natural gas prices can lead to reduction in margin in petrochemical 51 | P a g e . The company is in complete value chain of gas business. GAIL is India’s largest gas transmission company with almost 80% market share. 3. The project is being executed by GAIL. Resources in KG Basin and Mahanadi Basin ha increased the availability of natural gas. Opportunities: 1. 4. which is an existing profit making company having a good track record and credibility. 5. 3.

business. 52 | P a g e .

GAIL has to resort to large debt.100 Crore. In addition.500 Crore. To finance these existing and new projects. committee felt that considering large Capex involvement and debt services required. Any failure or delay on the part of instillation of Kakinada.243 Crore. If the 60 % (1st year) to 100 % (6th year) capacity is not achieved due to gas sourcing tie-up. However. GAIL will not achieve the minimum 12% IRR on the project GAIL is currently executing DVPL-GREP expansion and laying DBNPL and CJHPL pipeline projects worth of Rs 14.Basudevpur-Howrah pipeline by Reliance. increase in project cost.Basudevpur-Howrah pipeline and availability of low gas volume will affect the project IRR and return on investment to GAIL. firm gas tie -up with stream and downstream agencies. The total debt burden on GAIL will increase to estimated level of Rs 20. Availability of KG Basin/ONGC Mahanadi at Haldia is depending upon the laying of Kakinada. Investment Committee has deliberated on the above Risk Analysis and is of the opinion that considering the past track record of GAIL in executing the pipeline projects . firm gas tie-up with upstream and downstream consumer / transmission agreement is critical for meeting the required level revenue generation to maintain financial viability of the project and liquidity of the company.000 Crore by 2012-13 from the current level of Rs 1. 53 | P a g e 12 . However. In absence of firm gas supply agreement before commissioning the project and clear indication of likely availability of gas and the time line of such gas availability and completion of RIL's Kakinada-Basudevpur-Howrah pipeline will affect the project IRR and the return on investment to GAIL. Any mismatch due to lower capacity utilization of the pipeline due to non availability of sufficient gas or consumers will result in reduced cash inflow/revenue and thus impact the financial health and the liquidity of the company. RISK ANALYS IS & MITIGATIO N STRATEGI ES . it is proposed to take up three new pipeline projects at a cost of Rs 15. corporate and Management level. GAIL has signed MoU with RIL for transmission of KG Basin gas and ONGC for transportation of ONGC Mahanadi gas. timely pipeline completion can be achieved by having regular project review at site.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 The major risk identified are delay in execution.

30 1.02 Case 6 Decrease in Tariff Price by 10% 10.35 1.19 1.25%. Following Table provides the analysis for parameter like Project IRR post tax.69 1.26 1.42 1.19 1.02 Case 8 Decrease in revenue by 10% 10.79 1. Sensitivity Analysis A sensitivity analysis has been carried out to ascertain the effect of the following scenarios on the major financial parameters for the Main line / Trunk Line.64 Case 7 Increase in revenue by 10% 13.55 1.40% as compared to Base case Project IRR post tax at 12%.31 1.11 Case 10 Decrease in interest rate for term loan by 1% & WC 11.42 2.89 loan by 1% It is observed that availing benefit of Section 80 IA has a greater impact on the IRR of the proposed JHPL project with Project IRR Post Tax at 17.69 1.42 2.31 2.69 1. Minimum DSCR and the Average DSCR.77 by 1% under income tax section 80(IA) Case 4 Benefit 17.25 1.27 1. It is therefore recommended that GAIL Marketing team should be ready with all consumer tie ups before the start of the project. Sensitivity analysis has been carried out to assess the impact of changes in the operating environment of the project on its viability.87 1.83 Caseby 5% Case 1 Increase in the project cost 11. . It is also evident that.25 1. project is highly sensitive to the volume. The following parameters were considered for this: DSC R Descripti on Particula Project Minimum Avera ge rs IRR (%) Base 12 1. Further it is observed that change in tariff price and / or revenue has good amount of impact on the project IRR at 13.76 Case 2 Increase in the variable cost of the company by 5% 11.81 Case 3 Increase in term loan interest by 1% & WC interest 12.10 Case 5 Increase in Tariff Price by 10% 13.64 Case 9 Change in gearing to 60:40 11.50 2.20 1.13.

. as stated above. the base case IRR and DSCR levels are robust enough to withstand adverse variations in critical parameters.The sensitivity analysis shows that project IRR and DSCR levels are good in respect to JHPL Project. However.

The consumer transportation tariff works out to Rs 2103. The capacity available for this pipeline would be 32 MMSCMD (this includes 4 MMSCMD for common carrier). Timely completion of the project is must to avoid undue cost and to improve the profitability of GAIL.40/-MSCM to Rs 4457.996/. Conclusion & Recommendati ons GAIL (India) Limited. as per the market projections and as estimated by GAIL.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 2010 14. is India's flagship Natural Gas company with a turnover of over Rs 24. It is recommended that GAIL should enter into long-term Take or Pay contracts with its prospective consumers for sale of natural gas with provision to cover fixed cost in case of no off-take. major customer tie ups are done in this corridor to maintain the stability and there also exists demand potential from various small and medium scale industrial units in and around the corridor of JHPL.75/-MMBTU) which is in the acceptable range for the consumers. for which GAIL will approach Banks and Financial Institutions to finance the proposed project. ONGC from KG Basin & Mahanadi Basin respectively for meeting the gas demand of customers in this sector. The proposed Project loan is estimated at Rs 5346. 54 | P a g e . GAIL (India) Limited have received authorization from Ministry of Petroleum & Natural Gas (MoP&NG) for installation of Jagdishpur-Haldia Pipeline System for transportation and distribution of gas from various sources like Reliance. it is suggested that GAIL enter into firm agreements before the commencement of the project. GAIL will be engaging respected EPC contractors and credible suppliers for various equipments and other components of the project as to make the project a viable one and complete in time.13 Crore.Crores As part of National Gas Grid (India) Limited now wishes to undertake JagdishpurHaldia Pipeline Project with total investment of around Rs 7637. GAIL’s free cash flow is adequate to support the required equity contribution. In addition to this. Since gas supply arrangements for the projects are not entirely in place.MMBTU to Rs 133.92/-MSCM (Rs 63.33 Crore proposed to be funded at debt equity ratio of 70:30.11/.

the company is expected to meet its debt serving obligations towards the project. liquidity and profitability parameters of the project are considered reasonable and satisfactory. The tariff has been calculated based on PNGRB guidelines.The economic viability of JHPL project has been examined as envisaged by GAIL. Based on the appraisal exercise. it may be concluded that: Considering GAIL’s past and projected performance. The overall financial. 55 | P a g e .

Availability of consumers and gas from the proposed sources Volume of gas availability based on the project requirement Meeting time lines of availability of gas with respect to project completion Laying & availability of Reliance pipeline from Kakinada to Haldia. 4. 2. 56 | P a g e .JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 Subject to 1. 3. Weakness and threats encountered and impact of the various scenarios as analyzed under the sensitivity analysis. 5.

JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 ANNEXURE-1: ENVISAGED MARKET 57 | P a g e .

005 1.000 3.000 1.000 0.427 13 Total(1+2) 9 24 31 32 32 32 32 58 | P a g e .003 0.214 0.012 0.007 0.090 0.500 0.081 0.013 0.005 0.009 0.03 2.427 13 1.011 0.004 0.03 2.000 3.500 0.004 0.156 2.000 1.012 0.900 0.03 4.001 0.000 2.000 1.000 19 1 2 3 4 5 6 7 Steel Power Steel Power Power Power Steel Bokaro Katwa Durgapur Bandel Kolkata Durgapur Rourkela Jharkhand WB WB WB WB WB Orissa 0 0 0 0 0 0 0 0 1.013 1.009 0.750 0.005 0.03 4.000 2.03 2.007 0.009 0.578 2.500 0.067 2.000 2.500 15 2.083 0.004 0.007 0.013 1.117 0.000 1.214 0.012 0.156 2.004 0.000 0.011 0.500 0.000 2.000 19 2.013 1.001 0.950 0.214 0.03 2.004 0.011 0.900 0.005 0.003 0.214 0.03 2.090 0.001 0.03 2.001 0.090 0. Corp DIL Bhushan Steel JMT Auto Dina Iron & steel Ltd Didargange Dadiji’s Steels Ltd Balmukund Concast Patwari Udyog .009 0.005 0.081 0.003 0.03 2.090 0.003 0.013 1.007 0.214 9 1.000 1.005 0.001 0.03 2.900 0.004 0.012 0.000 2.214 0.009 0.004 0.117 0.03 2.000 1.083 0.000 3.000 0.900 0.03 4.004 0.JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 JagdishpurHaldia Capacity as per authorization: 16 MMSCMD Envisaged Market: S.005 1.013 1.003 0.03 2.427 13 1.578 1.003 0.011 0.427 12 1.156 2.012 0.750 0.067 2.214 0.005 0.03 2.005 0.081 0.067 2.03 4.005 0.000 0.005 1.011 0.009 0.012 0.980 0.083 0.000 19 2016-17 2017-18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 FCI Gorakhpur HFC Barauni FCI Sindhri HFC Durgapur West Bengal Power Dev.005 1.003 0.012 0.950 0.750 0.067 2.005 0.500 0.081 0.003 0.000 3.012 0.090 0.117 0.000 2.012 0.067 1.004 0.750 0.083 0.No Custom Sector Location State Phase 1 er 2011-12 (Gas V 2012-13 olume in MMSCMD) 2013-14 2014-15 2015-16 2.500 0.980 0.003 0.012 0.117 0.005 0.011 0.011 0.011 0.03 4.156 2.500 0.015 1.000 1.427 13 1.015 1.013 0.980 0.005 0.980 0.004 0.011 0.009 0.001 0.03 2.03 2.750 0.750 0.007 0.980 0.011 0.083 0.005 1.015 1.012 0.750 0.004 0. Patna Patwari Steel Pvt Ltd Patwari Forgings Pvt Ltd Iron (India) Ltd Sai Shriya International Oil & Energy Ltd Bawani Paper Mills Anjali Steels Rania Industrial Area Triveni Sheet Glass UP Rajya Vidyut Nigam Ltd Mohan steels Hindustan National Glass & Industries Exide Industries Ltd Hindustan Lever Ltd ALSTOM Reckitt Benkeiser Ltd Durgapur Chemicals LtdOpela RG Ltd La City Gas Projects Sub Total(1) Phase 2 SAIL WBPDC SAIL WBPDC Culcutta Electric Supply CoProjets Ltd Durgapur SAIL Sub Total(2) Fertilizer Gorakhpur s Fertilizer Barauni s Fertilizer Sindri s Fertilizer Durgapur s Power Sagardighi Fertilizer Kanpur s Steel Jharkhand Others Others Steel Others Others Steel Steel Steel Power Others Steel Others Others Power Steel Others Others Others Others Others Power Others Jamshedp ur Patna Patna Bihita Patliputra Fatoah Patliputra Patna Rai Bareily Rai Bareily Jaunpur Rania Allahabad Kanpur Unnao Rishra Haldia Haldia Durgapur Asansol Durgapur Madhupur UP Bihar Bihar WB WB UP Jharkhand Jharkhand Bihar Bihar Bihar Bihar Bihar Bihar Bihar UP UP UP UP UP UP UP WB WB WB WB WB WB WB 1.090 0.005 1.059 0.004 0.000 3.005 0.117 0.03 2.011 0.000 0.000 0.03 2.083 0.012 0.03 2.500 9 2.000 1.081 0.081 0.011 0.03 2.000 0.005 1.004 0.005 0.005 0.000 0.000 0.001 0.117 0.003 0.000 0.081 0.011 0.011 0.012 0.003 0.083 0.03 2.000 0.03 2.000 1.980 0.000 2.000 19 2.214 0.003 0.007 0.000 19 2.003 0.067 2.900 0.012 0.007 0.003 0.004 0.090 0.015 1.

JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 ANNEXURE-2: CAPACITY BUILD UP FOR JHPL IN PHASES 59 | P a g e .

11 1.05 0.05 0.90 0.38 0.08 0.45 0.60 1.08 1.26 0.34 0.11 0.45 0.05 0.50 1.58 1.58 0.2012 Dec.59 Commissionin g 2011-12 2012-13 2013-14 2014-15 Dec.08 0.78 70% 201415 1.42 10.1:Laying pipeline from Haldia to Phulpur with spur lines to :-CGS Kolkata -HFC Durgapur -WBPDC Sagardighi -CGS Jamshedpur -FCI Sindri -CGS Ranchi -HFC Barauni -Power Plant Barh -CGS Patna -CGS Chapra -CGS Siwan -CGS Gopalganj -CGS Betiah -Power Plant Betiah -CGS Varanasi -FCI Gorakhpur -CGS Allahabad Sub-Total Phase-2:Installation of compressor at Haldia and Spur lines to:-WBPDCCGS -SAIL & Bandel Durgapur -DPL Durgapur -WBPDC Katwa -SAIL Bokaro -Petrochemical Barauni -Others Sub Total Grand Total(P1+P2) 1.68 1.58 1.24 1.34 12.17 0.2 1.11 0.15 0.35 0.09 0.44 24.50 1.06 0.17 1.58 1.50 1.26 8.11 0.98 3.15 1.76 2.07 0.75 1.07 0.15 15.37 1.35 1.87 2.42 1.72 0.11 0.05 0.08 0.06 0.65 0.38 1.26 0.08 0.04 1.68 1.15 1.95 0.12 0.65 0.38 13.58 0.64 0.13 0.16 0.53 1.15 1.44 1.38 0.95 0.JAGDISHPUR-HALDIA PIPELINE: S.15 0.09 0.11 0.58 0.02 0.42 0.90 0.58 0.05 0.56 0.19 0.14 0.75 1.14 1.19 0.60 1.80 0.50 1.75 1.19 0.80 0.2012 2016-17 2017-18 0.90 0.65 0.13 0.07 1.18 80% 201516 1.39 22.45 0.59 1.20 0.58 0.06 0.42 0.27 9.79 0.03 60 | P a g e .85 6.35 20.14 8.08 0.2012 2011-12 2012-13 60% 201314 0.58 0.05 0.08 0.08 1.99 7.11 1.23 0.58 90% 201617 1.27 1.85 1.38 0.42 0.08 1.50 0.03 0.68 0.59 2 Sep.75 1.50 0.38 13.30 18.99 100% 2017-18 1.75 1.09 3.06 0.32 0.23 8.65 2.68 1.75 1.95 0.15 0.15 0.12 1.75 1.30 10.75 1.27 0. 2001 Mar.27 0.13 0.5 1.06 0.60 1.No Capacity Build Up for JHPL in Phases Completion Schedule DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 Description of Pipelin e Volum e (MMSCM D) Capacity build up year wise as per PNGRB regulations 60% 70% 80% 90% 2015-16 100% 100% Mechanic al 1 Phase.95 0.20 0.70 1.13 0.49 0.35 0.53 0.90 0.53 1.56 1.28 9.38 13.38 1.05 1.58 0.58 0.48 0.99 0.30 0.42 10.58 0.09 3.

JAGDISHPUR-HALDIA PIPELINE: DEMAND ESTIMATION & TARIFF DETERMINATION 201 0 61 | P a g e .