One, and the most important, what would be the role of Petronet India, the joint venture pipelines company set up in May last year to assure access on a common carrier principle? Two, if a private company is allowed to set up such a network what prevents the government from extending the same gesture to the national oil companies which now have to go through the Petronet route? Three, commissioning this pipeline will mean that there would be no need to go ahead with the Bina-Jhansi-Kanpur and the Koyali-Ratlam networks planned to be executed by Petronet during the next three years.

The crux of the matter, as observers say, is that while there is no problem allowing an enterprising private player to plan a logical approach for transport of petro-products, why then should thegovernment have thought of Petronet in the first place? The idea at that time was to ensure that there would be no monpoly in pipelines and that both the public and private sectors would not be deprived of access in the future.

The Reliance network envisages a link from Jamnagar via Ahmedabad to Indore in Madhya Pradesh with a capacity of around 20 million tonne for the Jamnagar-Ahmedabad section and six million tonne for Ahmedabad-Indore. The length of this pipeline, which will carry motor spirit, high speed diesel, superior kerosene oil and naphtha, will be around 550 kilometres.

In the second phase, Reliance has planned extension of this pipeline from Indore to Hyderabad via Bhopal and Nagpur (933 km); a branch pipeline from Ahmedabad to Patna via Udaipur, Kota, Gwalior, Kanpur and Allahabad (1,530 km); another branch pipeline from Ahmedabad to Hazira (230 km); and terminals/tap off points at Bhopal, Nagpur, Udaipur, Kota, Gwalior, Kanpur, Allahabad and Hyderabad with road loading facilities.

In itscommunique to the government, Reliance has stated that "the proposed pipelines do not compete with any one of the existing or announced pipelines of the oil companies/Petronet. While evaluating the proposal, the production of Bina refinery as well as the connectivity of the network to Koyali refinery has been taken into consideration."

The company has added that the network traverses through the under-developed regions of Rajasthan and Madhya Pradesh and therefore serves as an ideal infrastructure to promote industrial development of the region. However, experts of the oil sector do not buy this argument and are categoric that this network will effectively keep in check the big three oil companies and their respective projects.

Product supply from Indian Oil Corporation's refineries at Koyali and Mathura will be affected as also Bharat Petroleum's Bina project and Hindustan Petroleum's Bhatinda refinery which would be looking at the northern region. The Centre would logically argue that there would be noneed for BPCL's and HPCL's facilities as the Reliance pipeline would meet the shortfall in the central and northern regions of the country.

Also, HPCL has planned a pipeline from Vijayawada in Andhra Pradesh to Hyderabad which again would be of little consequence once the Reliance link is in place. To sum up, the company's extensive network would at one stroke do away with the need for two vital joint sector projects and associated infrastructure. The question, therefore, is what should the government do considering that it is eventually the owner of these oil companies which will be severely hit?

The role of Petronet will first have to be clearly defined and the Centre must clarify the joint venture company's scope and objectives. If an exception is made to a particular company, many others, especially those in the public sector, will logically insist that they can construct their own pipelines without any need for Petronet. This would happen at a time when the joint venture has formally finalised threeprojects: Vadinar-Kandla; Cochin-Karur and Mangalore-Bangalore. Many more are in the pipeline and it would be illogical at this juncture to put the brakes on them.

A great deal of thought will also have to be given to the survival of the big three refining companies. They are already in the middle of a crucial transition towards deregulation and would be severely affected if they operate with their hands tied. These are the issues the government needs to address first lest the situation gets out of hand.