The 1,442 kilometre long pipeline has a capacity of six million tonne and IOC plans to increase this to 8.8 million tonne for the Kandla-Kot (Rajasthan) section and to 8.5 million tonne for the Kot-Panipat (Punjab) stretch. The Kandla-Bhatinda pipeline passes through Gujarat, Rajasthan, Haryana and Punjab. Sources said the eventual objective is to increase capacity of this pipeline to 11.5 million tonne.

The expansion is necessary given the growing need for IOC to evacuate products not only from its own refineries in Mathura and the recently commissioned Panipat facility but also to cater to the needs of private players like Essar Oil and Reliance Petroleum. While Essar Oil's refinery will have a capacity of 10.5 million tonne, that of Reliance Petroleum is 18 million tonne. Both the facilities are scheduled to be commissioned towards the end of 1999.

In fact, IOC is reported to be in an advanced stage of discussions with both companies for marketing the products of their refineries in Gujarat through the Kandla-Bhatinda pipeline. This mode of transport will be preceded by one from Vadinar to Kandla in a separate pipeline being commissioned by Petronet India towards the end of next year.

Both Petronet and IOC will hold 26 per cent each in the project which will transport 11.5 million tonne of petro-products over a distance of 113 kilometres from Vadinar to Kandla. The pipeline will act as an input to IOC's Kandla-Bhatinda pipeline.

The Petronet pipeline will originate at Essar Oil's refinery at Jamnagar where adequate pumping facilities would be provided. Thereafter, the link would traverse for about 17 km so as to reach the main tank farm (MTF) of Reliance Petroleum's refinery. The pipeline would traverse sub-sea and would come out on the other bank of the Gulf of Kutch near Loni. From Loni to Kandla, the pipeline would take the land route.

As experts say, the demand of petro-products in the northwest region, comprising Jammu & Kashmir, Punjab, Haryana, Himachal Pradesh, Delhi, western Uttar Pradesh and Chandigarh is about 30 per cent of the all India demand. The demand in this region is partially met from IOC's Mathura refinery and is supplemented by rail movement from the Koyali refinery in Gujarat.

Observers say that there is a need to transport at least 11.6 million tonne of petro-products to the northwest region after considering all planned refinery capacity additions in the region till 2006-07. The deficit in the region is currently met from imports at Kandla moved into the hinterland via road, rail and the Kandla-Bhatinda pipeline.

Insight

There is no doubt that pipelines are the cheapest mode of transport of petro products and the expansion of the Kandla-Bhatinda pipeline would reduce the freight cost by one-fifth, as compared to transport by rail. But the enhancement of pipeline capacity would not help the IOC bottomline in any manner, because they would be reimbursed according to a particular rate of return on assets, in terms of the APM.