Sunday, November 30, 2014


“You and I come by road or rail, but economists travel on infrastructure.”
                                                   -Margaret Thatcher

Due to a fast growing and large economy, more and more places are being inhabited by more and more people in India. Many new and bigger industries are coming up. All these raise the nation's hunger for energy. For anything to grow, energy is needed. More so, if the growth is rapid.

Hence, we should ensure that procurement and transport of energy is done efficiently and in an inexpensive manner. Not only energy but materials like water, condensate, solids like coal, iron ore etc. for industries need to be transported from one place to another in an efficient and economical way
India has a large industrial base with huge demand for raw materials and energy. Power companies are fed coal by the railways. The iron and steel industry obtains iron ore and transfers out slag via rail and road. Water distribution companies carry water to remote areas by road and so on.

The overall costs are high when surface transport is used to move materials from one place to another. This cost has to be paid by the public, which they experience as inflation. It also adds to the extra congestion on the roads and tracks on which people travel, as the materials vie for public space during transport. Therefore, the public has to bear the burden of delays and late deliveries as well.

Alternately, coal and iron ore can be transported via pipelines by converting them into slurry. [A slurry is a thin sloppy mud or any fluid mixture of a powdered solid with a liquid (usually water). It is a convenient way to handle solids in bulk. Slurries are more or less thick fluids, flowing under gravity and capable of being pumped like fluids].

Slurry units can be built at the mines where coal and iron ores are extracted. The coal or iron ore slurry can then be pumped via pipelines to the industries, which use them.

The most important determinant of any transportation mode is cost effectiveness and accessibility. Every year around Rs. 45,000 to 50,000 crores (almost 10 billion USD) is spent by industries to transport coal, iron ore and petrochemicals through the railways in India [1]. This amount is then recovered from the public, which buys the finished products.

The expenditure to carry similar materials on road may be equal to the above amount if not higher.

All of these materials (and more) can be transported via pipelines at a fraction of the cost of ferrying them through surface transport.Compared to shipping by railroad, pipelines have lower cost per unit and higher capacity. Gas, oil and slurry need to be transported in large quantities and over long distances.

For this reason, pipelines are the most cost effective, energy efficient and safest means of transportation. Coal can also be gasified and pumped via pipelines with or without liquefaction. Approximately, Rs.45,000 to 50,000 crores (almost 10 billion USD) can be saved by constructing pipelines from production to consumption areas. After the initial capital cost of laying pipelines, the operational cost is very less, making it economically viable.

Earlier a huge bulk of petrochemicals, technically known as POL [Petroleum Oil and Lubricants] were transported via the railways. At present hardly 3-4% of the total bulk of POL is transported via railways and pipelines carry the rest [1A].

On a similar note, India imports close to 100 billion USD worth of petrochemicals especially crude oil. The transport cost by ships is around USD 2/Barrel [A] (depending on various factors). This comes to about USD2 billion in transportation cost alone every year. That is somewhere around Rs.12,000 crores. Add to it surcharges, and other contingency costs and the transport bill for imported oil alone will be in the range of 3.5 to 4 billion USD.

This huge amount is passed on to the public, which experiences all these phenomena as inflation.

What should change?

India should invest in a big way in setting up a robust pipeline network both within India (domestic) and outside (international). The Domestic Pipeline Network (DPN) will carry raw materials and energy from one place of production/processing (for example- mines) to place of consumption (industries).

Pipelines  for energy resources (petroleum and natural gas) are not just a part of trade. They relate to issues of geopolitics and international security also, and the location, construction, and control of oil and gas pipelines are important in geopolitical calculations. The International Pipeline Network (IPN) will connect energy rich nations to India (e.g. oil/natural gas/coal gas-Indonesia). Most of the pipelines will have to be under-sea pipelines, for example, India-Oman energy link. This will ensure India's energy security.


Internationally, the cost of building oil & gas pipelines is around USD1.5 Billion/1000 Kilometres [2]. But due to various factors in India's favour like labour, purchase power Parity, skilled manpower  and materials,  the cost can be brought down to about USD 500-800Million/1000 Kilometres.

The International Pipeline Network (IPN) may be around 5000 Km in length (Excluding the TAPI  project which has already been proposed).[2A]

Domestically, around 10,000 Km of pipelines can be laid over a period of 3-4 years. It can be a plan of coal gas/slurry, iron ore slurry, oil and natural gas pipelines.

Therefore, a one-time capital investment of around USD 10 Billion spread over 4-5 years (time and money needed to complete both IPN & DPN) can be planned. [This 10 billion USD is the annual cost of transporting coal, iron ore and POL over Indian railway network alone].

The same players who use rail to transport Coal, POL and iron ore can invest in building the pipeline network with government financial or other assistance.

 Map courtesy wikipedia

1.Indo-Sri Lankan Tunnel. India can set up refineries in Sri Lanka. Refined petroleum will be routed from Sri Lanka to India via the Indo-Lankan tunnel that will be constructed.(ROUTE 1)

2.Around  1000  km  from  Al  Hadd(Oman)  to  Dwarka(India)-pipeline.

3,4,5- Gas and Oil Feeder pipelines from UAE, QATAR, Saudi Arabia to Oman from where it will be routed into India via Line 2(explained above)

6.Northeast India to vietnam-1000 km. and

7.Kolkata to Andaman-1000 km. plus 1500 Km connecting  Indonesia  to  Vietnam/Andaman  (India)  feeder pipelines from where coal, slurry/gas, oil, and condensate can be pumped to India.

8.Kakdwip (India-West Bengal) to Sittwe (Myanmar) -500 km.

Map courtesy wikipedia

During   the   construction   of   pipelines,   field devices for remote operations should be installed, along with basic civil works and compressor and pumping stations.

The pipelines will be routed along what is known as a‘right of way’. The roadways and railways provide ample ‘right of way’, and the DPN can be constructed along or under the roadways or railways. Since pipelines take far lesser space than road or rail and hence can be located in forests, deserts, urban or industrial areas.

As pipelines allow transporting large quantities of gas and oil  over long  distances,  the  unit  cost of  this  transportation activity   is   very   low,   almost   zero.   For   the   gas   pipeline transportation sector, the unit cost per cubic metre-kilometre is around USD 0.00006. For the oil pipeline transportation, the unit cost is USD 0.02 per cubic metre-kilometre [3]. For coal and iron ore slurry pipelines, costs will hover around USD 0.5-1/cubic metre-kilometre.

Gasified coal pipeline might cost even less. The operational costs of such a huge network of pipelines both IPN&DPN will be around 100 million USD or less annually. Hence,the payoff in terms of national utility and energy security is immense, not to mention that it will be highly economical. Moreover, it will provide employment to millions of Indian youth and generate revenues for Indian companies.

The Domestic Pipeline Network (DPN) can also consist of a network of pipelines carrying milk from one part of India to another.A massive network of milk pipelines may seem unbelievable.
However, if we see at the bigger picture it will become clear that it is a necessity. Just for starters, the Karnataka Milk Federation (KMF) alone has a surplus of around 1 lakh litres (one hundred thousand litres) of milk a day. It spends close to Rs. 6 per litre to transport it from Bangalore to places like New Delhi and Guwahati by road. Add to it the handling cost and spoilages and transport cost per litre will hover around Rs.10. India is now a surplus producer of milk.

Millions of farmers and hundreds of milk co-operatives produce a large amount of daily surplus. But there are areas in India where there is high demand but great shortage of milk. Thus, milk availability is uneven. By building a dedicated milk pipeline system, we can transport milk from one place to another with minimal cost.

This will make milk and milk products cheaper and affordable by common person. It will also reduce inflationary burden of food based on milk. It will also go a long way in ensuring food security, as milk is one of the most nutritious of foods. The lack of a previous milk pipeline model should not deter us from pioneering and building one ourselves.

These plans can be implemented with multiple stakeholders to hedge risks. An Indian Pipeline Corporation (IPC) under the PMO can be created to oversee the overall planning, implementation and operation of the pipelines.

Russia has ‘Pipeline Troops’ as part of the Government Services, who are trained to build and repair pipelines [4]. A similar group of trained, technical personnel can be created to manage the vast pipeline network that India will soon be having.

Wherever there are pipelines there has to be peace. Wherever the IPN and DPN will go, those areas will increasingly come under a structured and peaceful social order, as the government has to ensure peace if pipelines have to make inroads in any area.

The IPN and DPN can be later expanded into a South Asia Centred Energy Network (SACEN) to cater to the energy needs of SAARC Nations.

                                                     - Dr.Kartik Hegadekatti.

Dr.Kartik Hegadekatti is an Indian Civil Service officer presently serving in the Ministry of Railways in India. Views Expressed are Personal.

[A] Center/oil_transportation.htm#World       Oil       Transit

[1]According to " /newsite/ Print Release
.aspx?relid=104814" the total goods earnings were Rs. 94,925 crores during fiscal 2013-14 for Indian railways. Coal and iron ore constitute over 50% of the earnings giving a value of around
50,000 crores.

 [1A]. Pipeline_transport

[2].THE CHALLENGES OF FURTHER COST REDUCTIONSFOR   NEW   SUPPLY   OPTIONS   (PIPELINE, LNG, GTL) by   Sylvie Cornot-Gandolphe, Olivier Appert, Ralf Dickel, IEA; Marie-Françoise Chabrelie, Alexandre Rojey, Institut Français du Pétrole and CEDIGAZ at the  22nd World Gas Conference 1-5 June 2003, Tokyo, Japan; /~evans/PipelinesTokyo.pdf

[2A].India  can set up refineries in Sri Lanka. Refined petroleum will be routed from Sri Lanka to India via the Indo- Lankan tunnel that will be constructed.

[3].ESTIMATING      THE      COST      OF      PIPELINE TRANSPORTATION     IN     CANADA     Eugène     Karangwa, TransportCanada. renceProceedings/Karangwa2008.pdf

[4].‘Russlands Militär übt für möglichen US-Angriff auf
Iran’ (in German). Ria Novosti. 16 January 2012. Retrieved 17
January 2012.

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