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Product pipelines to operate on common carrier principle

NEW DELHI DEC. 5. The Union Government today said that common carrier principle would apply to only excess capacity in the existing petroleum product pipeline but future capacity built would have to be shared with the industry.

"Common carrier principle will not apply to (existing) dedicated pipelines. Only the excess capacity can be shared... Capacity of product pipelines constructed, hereafter, would be shared," Union Petroleum Minister, Ram Naik, told reporters after tabling the new guidelines for petroleum product pipeline in Parliament.

Oil companies/investors interested in laying a product pipeline originating from a refinery or a port would be required to publish the proposal inviting other interested companies to take capacity in the pipeline, he said adding capacity would be shared on mutually agreed commercial terms. New pipelines would necessarily have to provide at least 25 per cent extra capacity for other users, he said.

"The pipeline tariff will be subject to the control orders or the regulations that may be issued by the Government under the appropriate law in force," he said.

Stating that the guidelines would not apply for crude oil pipelines, Mr. Naik said the Government would announce a policy for gas pipeline in the next three months.

While companies will be free to construct pipelines originating from refineries or meant for captive use, the guidelines would apply on pipelines exceeding 300 km in length and those originating from a port location, Mr. Naik added. He said pipelines originating from refineries up to a distance of 300 km from the refinery and pipelines dedicated for supplying product to a particular consumer would be free from Government regulation. Construction of pipelines with more than 300 km length would necessarily need the approval of the oil sector regulatory board, he said adding the Government was now doubling as the regulator till the passage of Petroleum Regulatory Board Bill by Parliament.

Internationally, transportation of petroleum products by pipelines is preferred to other modes of transport for the reasons of safety, operational convenience and its environmental benefits. Besides, transportation of products by pipelines is cheaper in comparison to other modes like rail and road.

"In developed countries, around 60 per cent of the total petroleum product is transported through pipeline. In India, this percentage is now around 32," Mr. Naik said adding the percentage was likely to go up to 45 per cent in the next 2-3 years following issuance of the guidelines.

The announcement of the new policy guidelines for granting right of use (ROU) in land for laying product pipelines by the Government was expected to facilitate expeditious clearance of the pipeline projects. Central India pipeline, Chennai-Madurai pipeline and pipelines from the west coast connecting the South and Central Indian markets would now take off, he said. Mr. Naik favoured granting infrastructure status to pipeline projects.

PTI

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