On January 8th, 2020, the Cabinet Committee on Economic Affairs approved funding of INR 5,559 Crore for the North-East Gas Grid project. The proposed length of the gas grid pipeline is 1,656 km. The Project will connect Guwahati in Assam to major cities in the North-East Region– Itanagar, Dimapur, Kohima, Gangtok, and Numaligarh to name a few. The original budget for the project was INR 9,262 Crore. The lack of anchor customers makes the Project less economically viable, hence, the government has provided a viability gap funding of 60%, and the association in charge of the Project has stated that the remainder of the funding will be raised through equity and debt.

The primary aim of the Grid Project is to facilitate natural gas to various users in this and surrounding regions. The long-term goal of the government is to increase the natural gas share in the energy mix from the current 6.2% to 15% in the future, with the global average being 24%. This project falls under the ambitious Pradhan Mantri Urja Ganga Project, which aims to provide compressed natural gas(CNG) and piped natural gas (PNG) to residents of Varanasi, Uttar Pradesh and subsequently to the Eastern region of India. Furthermore, the government aims to establish the National Gas Grid, which is a network of gas grids—with pipelines of nearly 16,788 km in operation and of 14,239 km in development—for providing easy and reliable access of natural gas to domestic, industrial, and transport users.

Indradhanush Gas Grid, a collaborative venture of State-owned corporations, namely GAIL (India) Limited, Indian Oil Corporation, Oil India Limited, and Numaligarh Refinery Limited, is in charge of the Project. Indradhanush Gas Grid is managed by the Ministry of Petroleum & Natural Gas and has proposed the ‘Hydrocarbon Vision 2030’ for North-East India. This region contributes to 20% of the natural gas production in the country. As asserted by the government, it is only just that this production and contribution be utilized for the region’s development. This Project intends to promote the economic development of North-East India by utilizing its hydrocarbon potential and by providing residents access to clean fuel.

Why Natural Gas?

The use of natural gas has significant advantages in terms of the economic growth of the country. Natural gas is cheaper and a relatively environment-friendly alternative. The establishment of pipelines considerably reduces transportation costs for gas by using trucks, trains, and other means. The monetary savings from the usage of natural gas instead of alternate fuels, is also a reason. Further, the storage of natural gas is easier and relatively safer in stable areas. CNG is 60% cheaper than petrol and 40% cheaper than diesel.

The significance of the aforementioned Project in light of promoting natural gas is that it will provide better gas connections to households and better infrastructure for automobiles using gas. Power generation with the use of gas is expected to contribute the maximum, ranging from 36% to 47% in the projected period of 2012-13 to 2029-30. The data shows that the biggest demanding sectors are: Power and Fertilizer, which continue to account for more than 55% of gas consumption.

Image Source: PGNRB Report

Potential & Possible Challenges

The government has enthusiastically proposed the Project to provide access to clean energy. However, several implementations and post-implementation aspects must be probed and taken into consideration. The cost to be incurred by consumers is one such critical factor. It must be noted that the Northeast region is responsible for about 4% of the national consumption of natural gas, which is considerably lower than the western region. In Indian households, particularly rural households, firewood and kerosene are used as primary sources of fuel. These findings can partially be attributed to the dearth of access to cleaner fuels, such as natural gas. However, another deterrent factor is the high connection cost of piped natural gas. To utilize piped natural gas, a household incurs a cost of Rs. 6000, in addition to the bi-monthly bill depending on the usage. Although Rs. 5000 of this incurred cost is a refundable deposit, a consumer or household is required to pay it out of their pocket nonetheless. The high cost and the inability of supplementing low imports with domestic production are some of the potential factors contributing to India not reaching its estimated consumption level for natural gas. In light of such consistent waning, the government must introduce policies and schemes that reduce the cost to consumers through subsidies to promote the use of natural gas.

Another crucial aspect in the construction of these pipelines is the topography of the northeast region. Physiographically, the northeast is one of the most complicated regions in the country. It largely comprises the Eastern Himalaya, a hilly region known as the Patkai, and some valley plains. With the exception of some valleys and flatlands, nearly 67% of the region is composed of hilly terrain with valleys and plains scattered throughout. With the wide-ranging altitudes from the sea level to 7000 km above the mean sea level, the notoriously high seismic activity and severe floods have historically brought disasters upon the region.

Imphal, Guwahati, and Kohima—cities that the Project seems to have a particular interest in—are subjected to the highest risks in the region. In such a complex topography, flaring and leakage would be two prevalent threats of natural gas processing industries as well as pipeline grids. Increasing the utilization of natural gas in this region would inevitably result in increased fracking, a procedure that requires a high amount of water and chemicals to be injected into the wells. Studies have shown that fracking generates earthquakes, although of a small and often harmless degree. Considering the aforementioned aspects, the construction of this gas grid becomes increasingly tricky if not treacherous.

Advantages of PNG over LPG

The households that have switched to PNG have claimed that safety concerns supported their decision to prefer PNG over LPG cylinders. They receive a continuous supply, with a payment as per usage bill at the end of the month. Moreover the maintenance is quite efficient, as in case of any leakage, the regulator gets turned off automatically. PNG is also a big relief for households as there is no waiting time, when compared to the 2-4 days long refilling process for LPG cylinders. It also saves a lot of space in the kitchen and is charged only as per usage. Because of the aforementioned reasons, the users of PNG consider it a better alternative to LPG as a cooking fuel.

Scope of Natural Gas as a Sustainable Fuel

Since the previous decade, governments worldwide have attempted to promote a gas-based economy, which is considered a bridge towards a renewable energy economy. It is pertinent to understand that natural gas is termed ‘the bridge’ fuel, underscoring that it is merely a supplement to renewable fuel. Considering that India aims to reduce its carbon footprint, does this Project serve this cause? It is true that natural gas is cleaner than other conventional fossil fuels. However, certain aspects of natural gas usage in regards to its ‘environment-friendly’ nature are still debated by the international scientific community. Natural gas, which is basically methane, is the second-most predominant greenhouse gas after carbon dioxide. A comparison has revealed that methane has a 25% higher impact on climate change than carbon dioxide over a period of 100 years. However, the prevalence of carbon dioxide emission is much higher. Natural gas is a relatively cleaner fossil fuel but a non-renewable resource nonetheless. These grids ultimately increase our reliance on fossil fuel as a primary source. With the continually increasing global temperatures and the imminent threat of triggering the domino effect of climate events, these scientific communities argue that it is time to drop the bridge and adopt clean renewable energy sources. There are several clean renewable energy alternatives, such as solid biomass fuels and solar energy.

Image Source: BP Statistical Review of World Energy, June 2019

The government has a long term vision behind the Northeast Gas Grid project, as it is a step towards a Gas based economy and an attempt to increase the share of natural gas in the energy mix of the country. However, given the unsustainability of the long term usage of methane, the nation needs to come up with better sustainable fuel alternatives.

By Himadri Tripathi & Apurva Gajbhiye, Research Associates, Policy