The plan involves laying a 550-kilometre liquid product pipeline from Jamnagar via Ahmedabad to Indore in Madhya Pradesh. RPL would, in the second phase, extend this pipeline from Indore to Hyderabad via Bhopal and Nagpur while planning branch pipelines from Ahmedabad to Patna via Udaipur, Kota, Gwalior, Kanpur and Allahabad and from Ahmedabad to Hazira.

Petronet, which was formed to develop a pipeline infrastructure in the country, has reiterated to the ministry that the basic goal of providing access on a common carrier principle would be violated through the RPL proposal. The joint venture company has indicated that it is in the interests of the country to have all pipeline proposals routed through the Petronet umbrella insteadof allowing companies to set up networks on their own.

While Petronet officials were unavailable for comment on the issue, ministry sources said the company was also of the view that the RPL plan would spawn a monopolistic control of pipelines in the future. If this happened, there would be no stopping the three refining majors -- IOC, BPCL and HPCL -- who hold 50 per cent equity in Petronet from setting up their own pipelines."What then is the role of Petronet and where is the spirit of the common carrier principle?" sources asked.

The joint venture company has also told the ministry that the RPL proposal would ensure that some of its own pipeline networks planned would never see the light of day. These include Koyali-Ratlam, Bina-Jhansi-Kanpur and possibly even the Paradip-Rourkela-Ranchi-Allahabad link.

All these pipelines are planned to be commissioned by 2002 but may be shelved if the RPL proposal gets the ministry okay. As sources indicate, it is not only the three pipeline networks of Petronetwhich will be affected, but also some crucial refinery projects. The one that is the most vulnerable is the Rs 7,500-crore Bina refinery promoted by the Bharat Petroleum Corporation and the Oman Oil Company. It will have no role to play once the RPL pipeline plan is in place and the question therefore is the fallout of such a trade-off.

Petronet has also pointed out that a pipeline proposal would have to be supplemented by other details, especially numbers, regarding supply and demand or even indicating the feasibility of other modes of transportation. The company is of the opinion that until this is done, there is really no point presenting a proposal.

In its communique 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 companyhas 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. While there is no indication of what the petroleum ministry's stance is on the RPL proposal, sources say Petronet is absolutely justified in its apprehensions, especially as the plan could violate the common carrier principle in pipeline access. The interesting twist could occur if RPL is agreeable to the Petronet route and offers the latter a 26 per cent stake in its pipeline proposal. What would happen then?

The first casualty, and a costly one at that, will be the Bina refinery and if that were to happen, BPCL would be left holding one refinery in Mumbai. There would be no need for three Petronet networks, already listedabove, which means three vital plans going down the drain. This is not all. Product supply from Indian Oil Corporation's refineries at Koyali and Mathura will be affected and there would be no justification for Hindustan Petroleum's Bhatinda refinery to feed the northern region.

INSIGHT
Investments in pipeline are a must

One of the major objections by Petronet is that there is an overlap in the pipelines proposed by Reliance and the ones under implementation by Petronet. This would result in duplication of investments in pipelines and at the same time make proposals for some of the new refineries in Bina unviable.

Nevertheless, investments in pipelines are a must. Apart from removing regional disparities in prices by being the cheapest mode of transport, they reduce maintenance investments in roads and railways, which are currently overburdened owing to excess traffic. Cheaper petro prices would help Indian industry.

Therefore, the government's dilemma is how to weigh the cost-benefitanalysis of the pipeline project proposed by RPL and the prior proposals of PSUs to set up refineries in various parts of India. In a supply surplus situation facing India within a year, investments in pipelines are always welcome. But since pipelines are natural monopolies, there has to be a common carrier principle applicable to it and the returns on the investments in pipelines should be governed by an independent regulator.