The Union Government has notified a new policy for laying petroleum product pipelines in the country on `common carrier' principle, The policy was announced by the Union Minister for Petroleum & Natural Gas, Mr Ram Naik, on 4 December 2002.

The new policy has categorised product pipelines as those that originate from refineries - both coastal and inland - up to a distance of around 300 kilometres.

The policy also covers pipelines dedicated to supplying petroleum products to particular consumers. Such pipelines may originate either from a refinery or from an oil company's terminal as also those from ports, apart from pipelines originating from refineries exceeding 300 km in length.

Announcing the policy guidelines, Mr Naik said that companies and investors would have complete freedom in respect of pipelines originating from refineries or those meant for captive use of companies. For these, the grant of right of user (RoU) in land would be unconditional for pipelines less than 300 km, he said.

However, for pipelines exceeding 300 km in length as also those originating from a port location, the grant of RoU in land would be subject to fulfillment of certain conditions.

As per the notification, oil companies/investors interested in laying a product pipeline from a refinery or a port would have to publish the proposal to invite other interested companies to take a share in the pipeline's capacity.

Any oil company interested in sharing the capacity of the pipeline would be able to do so on mutually agreed commercial terms and conditions. The proposer company would then provide capacity for such interested parties also. As for the proposer company, which apples for the grant of RoU in land, it would have to provide at least 25 per cent of the pipeline's product carrying capacity to the other interested parties.

While such pipelines would be owned and operated by the proposer company, the tariff for these would be subject to the control orders or regulations that may be issued by the Government under the appropriate law in force, Mr Naik said.

The new petroleum product pipeline policy is expected to expedite the implementation of stalled projects such as the Central India Pipeline, the Chennai-Madurai Pipeline as also pipelines from the West Coast linking the south-central Indian markets.

With this, the share of pipelines in product transportation in the country is estimated to touch around 45 per cent over the next 2-3 years from the current level of 32 per cent. In developed countries, about 60 per cent of the total petroleum products movement are done through pipelines.

Mr Naik noted that transportation of petroleum products through pipelines is about 30-40 per cent cheaper in comparison to other modes such as rail and road. Besides, it is preferred to the other modes of transport for reasons of safety, operational convenience and its environmental benefits.

The new guidelines, however, do not contemplate any restrictions or conditions for grant of RoU in land for crude oil pipelines.

The Government is expected to come out with a separate set of guidelines for laying crude and gas pipelines in the first quarter of 2003-04.