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Ennore-Trichy-MaduraiLPG Pipeline

Detailed Feasibility Reporton

Ennore

LPG Pipeline

Chengalpet

Pondicherry

Trichy

Madurai

January 2013

Pipelines Division

CONTENT

Chapter No.

Description Page No.

Executive Summary (i)

I

Introduction 1

II Analysis of Alternatives 4

III Need and Justification 13

IV

Design Philosophy 18

V Project Description 20

VI Capital Cost 28

VII

Operating Cost

32

VIII

Financial Analysis

35

IX

Conclusions and Recommendations

37

Annexures

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( i )

Executive Summary

1.0 INTRODUCTION

1.1 India is deficit in Liquefied Petroleum Gas (LPG). Industry imports LPG to the tune of

5 MMTPA to meet the domestic demand. South India, comprising Andhra Pradesh

(A.P.), Karnataka, Kerala and Tamil Nadu, is also deficit in LPG.

1.2 In 2010-11 and 2011-12, the deficit of LPG in southern region was about 2.8 MMTPA

and 3.0 MMTPA respectively. As per the latest supply-demand assessment, the demand

in south India is expected to be about 6.4 MMTPA in 2016-17 and about 7.3 MMTPA

by 2021-22. Domestic availability of LPG would be about 4.3 MMTPA and

4.5 MMTPA in those years. The deficit in 2016-17 is projected to reduce from the

present level of 3.0 MMTPA to 2.1 MMTPA, mainly due to additional production of

LPG after implementation of the proposed expansion plans at Chennai refinery of

Chennai Petroleum Corporation Limited (CPCL), Kochi refinery, Mangalore refinery

and Vizag refinery, and commissioning of Nagarjuna refinery. However, the deficit is

projected to increase again to 2.8 MMTPA in 2021-22, which would continue. This

deficit would be met by import of LPG through coastal receipts at Ennore, Vizag,

Mangalore and Kochi ports.

1.3 Presently, IOC operates 11 LPG bottling plants in Tamil Nadu viz. Ennore, Erode,

Ilayangudi, Madurai, Mannargudi, Mayiladuthurai, Salem, Trichy, Chengalpet,

Coimbatore and CPCL Chennai and 1 plant at Pondicherry.

1.4 M/s IndianOil Petronas Private Ltd. (IPPL), a Joint Venture of IOC and Petronas,

Malaysia have set up a LPG import terminal at Ennore, primarily to meet the deficit of

LPG in Tamil Nadu. The terminal has been commissioned and is in operation since

August 2012, handling about 100 TMT of LPG per month. It presently supplies LPG to

IOC’s bottling plants at Ennore, Ilayangudi, Trichy and Madurai in Tamil Nadu by road

tankers.

1.5 CPCL has monthly output of about 33 TMT of LPG, out of which IOC’s share is about

28 TMT. This LPG is predominantly used for meeting non-domestic requirement of all

bottling plants in Tamil Nadu, Cuddapah bottling plant in A.P. and about 50%

requirement of Devanagonthi bottling plant in Karnataka. Requirement of CPCL’s

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( ii )

bottling plant at Chennai is also met by CPCL refinery. Requirement of domestic LPG

in Tamil Nadu, Cuddapah and part requirement of Devanagonthi is met from LPG

import terminal at Ennore by road tankers.

1.6 As these bottling plants are situated at considerable distance from Ennore, an

optimisation study was carried out in 2011, which indicated that there would be

considerable savings if a LPG pipeline system was put in place from Ennore to Trichy

via Chengalpet and Pondicherry to substitute the road movement of LPG ex-

Chennai/Ennore to the bottling plants in Tamil Nadu and Pondicherry. Further, nodal

movement from Trichy was envisaged to reduce road movement to other bottling plants

in Tamil Nadu. LPG sourcing for bottling plants in other states of south India would

continue from the existing sources at Ennore, Mangalore, Vizag and the proposed

import terminal at Kochi.

1.7 Vide Agenda Item No. P/224 dated 23.4.2012, Board had accorded first-stage approval

to the proposal of laying a pipeline from Ennore to Trichy for transportation of LPG and

had approved an amount of Rs.5 crore for carrying out pre-project activities, so as to

facilitate preparation of Detailed Feasibility Report (DFR) for the proposal. The Board

had also advised to carry out study of various alternatives of pipeline connectivity to

more bottling plants in Tamil Nadu.

1.8 Subsequent to the first-stage approval, survey of the pipeline route has been completed

and optimisation has been carried out for different pipeline configurations so as to arrive

at the optimum configuration. Details are as under.

1.9 Analysis of Alternatives

1.9.1 To start with, assumptions considered for optimization study carried out in April 2011

for formulation of feasibility report (FR) were revisited. It emerged that, with

materialization of Kochi LPG terminal proposal, which was not considered at the time

of preparation of FR, there might be some impact on the throughput of the proposed

pipeline. Accordingly, optimization study was carried out again in September 2012,

considering LPG import facilities to be available at Kochi by 2016-17. The proposal for

Kochi LPG import terminal was subsequently approved by the Board in

December 2012.

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( iii )

1.9.2 Findings of the optimization study of September 2012 were as under.

Scenario Delivery locations directly

linked with Pipeline

Projected Throughput and Savings

2016-17 2021-22

1. 3 (Chengalpet, Pondicherry,

Trichy)

494 TMT

Rs.64 crore

755 TMT

Rs.117 crore


Trichy, Madurai)

494 TMT

Rs.73 crore

755 TMT

Rs.130 crore


Trichy, Salem)

494 TMT

Rs.74 crore

755 TMT

Rs.132 crore


Trichy, Madurai, Salem)

494 TMT

Rs.82 crore

755 TMT

Rs.146 crore


Trichy, Salem, Erode and

Coimbatore)

494 TMT

Rs.78 crore

755 TMT

Rs.153 crore


Trichy, Madurai, Salem, Erode

and Coimbatore)

494 TMT

Rs.82 crore

755 TMT

Rs.165 crore

From the above details, it emerged that throughput of the pipeline would remain the

same in any combination of linked bottling plants.

1.9.3 Preliminary analysis of various alternatives was then carried out and the two best

options were short-listed for preparation of the detailed scheme and cost estimates,

manpower assessment and financial analysis etc. Results of the analysis were as under.

Scenario Length

(km)

Operating

Manpower

Capex

(Rs. crore)

Opex

(Rs. lakh)

RoI

(15 years)

Rank based

on Financial

Attractiveness

1. 494 64 581 30 12.9 1

2. 615 78 719 36 11.1 2

3. 620 92 736 37 10.7 3

4. 742 102 873 42 9.7 4

5. 810 120 948 47 8.6 5

6. 932 130 1068 51 6.4 6

1.9.4 This study concluded that Ennore-Trichy pipeline and Ennore-Trichy-Madurai pipeline

would be the two financially most attractive pipeline configurations.

1.9.5 Based on the above analysis, CO(Optimisation) undertook another study in January

2013, considering updated demand numbers for working out throughput and savings for

the said two pipeline configurations. The study considered all-India supply-demand

scenario for IOC in 2016-17 and 2021-22. Findings of the study were as under.

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( iv )

Pipeline Configuration

Throughput

(TMT)

Savings

(Rs.crore)

2016-17 2021-22 2016-17 2021-22

Ennore-Trichy Pipeline 617 809 92.9 154.5

Ennore-Trichy-Madurai Pipeline 617 809 103.5 169.9

It can be noted that throughput projection and savings for both 2016-17 and 2021-22

have improved from earlier workings in both pipeline configurations.

1.9.6 IOC already has a petroleum product pipeline from Chennai to Madurai due to which

right-of-way (RoW) up to Madurai is already available. Therefore, considering

availability of most of the right-of-way up to Madurai and marginal difference in RoI

for pipeline up to Trichy vis-à-vis pipeline up to Madurai, it was considered prudent to

undertake detailed feasibility study for laying the pipeline up to Madurai. The DFR has

been prepared accordingly.

1.10 The DFR broadly deals with the need and justification, system configuration, cost,

viability, implementation methodology and allied details in respect of the proposed

pipeline from Ennore to Madurai via Trichy. The pipeline would originate at Ennore

import terminal and terminate at the existing Madurai bottling plant, providing pipeline

connectivity en route to the existing LPG bottling plants at Chengalpet, Pondicherry and

Trichy.

2.0 NEED AND JUSTIFICATION

2.1 The demand of LPG in south India in 2011-12 was about 4.5 MMTPA. As per the latest

LPG supply-demand workings by Marketing Division, LPG demand of Industry for

south India is projected as under.

Fig. in MMT

Year 2016-17 2018-19 2021-22

South India Demand 6.4 6.8 7.3

2.2 Considering actual demand of previous year, projected growth rate in the demand and

supply scenario, CO(Optimisation) has carried out optimization study for proposed

Ennore-Trichy-Madurai LPG pipeline for 2016-17 and 2021-22. The study projects

throughput of 617 TMT in 2016-17 and 809 TMT in 2011 for the pipeline and

substantial savings in logistics cost.

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( v )

2.3 At present, CPCL refinery is producing about 33 TMT of LPG per month. CPCL’s LPG

is primarily used for bottling plant at Chennai, non-domestic requirement of bottling

plants in Tamil Nadu, Cuddapah in A.P. and partial requirement of Devanagonthi

bottling plants.

2.4 Most of domestic requirement of LPG at IOC’s bottling plants in Tamil Nadu,

Cuddapah in A.P. and partial requirement of Devanagonthi is met from LPG import

terminal at Ennore by Road Tankers.

2.6 Throughput Projections

2.6.1 The supply and distribution plans of LPG for various bottling plants linked to the

proposed pipeline, for 2016-17 and 2021-22, have been projected to be as under.

Fig. in TMT

Supply Distribution

Ennore

port

2016-17 2021-22 2016-17 2021-22

617 809 Chengalpet 138 180

Pondicherry 43 44

Trichy 273 385

Madurai 163 200

Nodal movement from Trichy (134) (235)

- Salem 101 112

- Erode 3 81

- Coimbatore 30 42

Nodal movement from Madurai (24) (50)

- Ilayangudi 18 43

- Tirunelveli 6 7

Bottling Plant at Trichy 139 150

Bottling Plant at Madurai 139 150

Total 617 809

2.6.2 It may be seen from the above table that out of the projected throughput of 617 TMT for

2016-17, about 134 TMT and 24 TMT of LPG would be transported through road from

Trichy and Madurai respectively. Similarly, out of the projected throughput of 809 TMT

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( vi )

for 2021-22, about 235 TMT and 50 TMT of LPG would be transported through road

from Trichy and Madurai respectively.

2.7 The long-term projected throughput for the pipeline would be as under. For working out

projected demand beyond 2021-22, growth rate of 1.76% has been considered, as

assessed by the Planning Cell of Marketing Division. As the pipeline would originate

from Ennore import terminal, the additional demand would be met by increasing the

imports.

Throughput Projections (TMT)

2016-17 2021-22 2026-27

617 809 883

2.8 It is pertinent to mention here that while some of the bottling plant capacities are

projected to be saturated during 2016-17, the demand in attached markets would

continue to increase. Therefore, it would be required to either stretch the capacities of

the existing plants or set up new bottling plants in and around the existing markets to

meet the increased LPG demand as required. Therefore, the pipeline facilities have been

designed considering long-term demand projections.

2.9 For facilitating nodal movement to linked bottling plants from Trichy and Madurai, the

existing unloading bays would be converted to loading bays.

2.10 The transportation requirement of LPG volumes indicated in para 2.7 can be met by the

following alternative modes.

a) By Road

b) By Pipeline

Railway has not been considered as a feasible transportation option for LPG as the

existing bottling plants do not have rail linkage.

2.11 It has been established the world over that pipelines are superior means for

transportation of petroleum products compared to other modes viz. rail, road, tankers

etc. due to their inherent advantages like reliability, economy, safety, flexibility, low

energy consumption, low transit losses and negligible impact on environment.

Construction of new pipelines provides relief to other modes of transportation for

movement of essential commodities and passengers.

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( vii )

2.12 In view of the above, it is proposed to lay Ennore-Trichy-Madurai LPG pipeline for

transportation of LPG from Ennore to the LPG bottling plants at Chengalpet,

Pondicherry, Trichy and Madurai. The proposed pipeline would realign movement of

LPG for certain other bottling plants viz. Salem, Coimbatore, Erode, Ilayangudi and

Tirunalveli from Trichy and Madurai in place of the present practice of movement from

Ennore. Thus, the proposed pipeline would considerably reduce distances involved in

road movements and thereby, logistics cost.

3.0 Design Capacity

3.1 Taking into account findings of the optimization study and the requirements of linked

bottling plants, it is proposed to design the proposed LPG pipeline from Ennore to

Madurai for a capacity of 0.9 MMTPA.

4.0 Project Description

4.1 Pipeline Route

4.1.1 The proposed pipeline would originate at IPPL’s LPG import facilities at Ennore and

would follow an independent route for approximately 30 km, where it would meet the

existing right-of-way (RoW) of Chennai-Trichy-Madurai Pipeline (CTMPL) at its

chainage 27.4 km. Thereafter, the pipeline would follow the RoW of CTMPL up to

Madurai via Asanur except for about 5.3 km detour for linking Chengalpet bottling

plant, about 55 km to Pondicherry bottling plant and about 19 km to Trichy. The

pipeline, after leaving CTMPL RoW near Madurai delivery station of CTMPL, would

further follow an independent route for about 28 km to reach the bottling plant at

Madurai.

4.2 System Configuration

4.2.1 Configuration of the pipeline system broadly comprises the following.

Total length: 615 km

419 km long, 10.75” OD x 0.25” WT pipeline section from Ennore to T-Point

location for Trichy bottling plant

55 km long, 8.625” OD x 0.25” WT branch pipeline from T-point to

Pondicherry and 19 km long, 8.625” OD x 0.25” WT branch pipeline from T-

point to Trichy

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( viii )

122 km long, 8.625” OD x 0.25” WT, branch pipeline from T-point location

for Trichy to Madurai

2 booster pumps and 3 motor-driven mainline pumping units with variable

frequency drive at Ennore

Scraper facilities at T-point locations for branches to Pondicherry and Trichy

bottling plants

Delivery facilities at Chengalpet, Pondicherry, Trichy and Madurai

4.3 Operation Philosophy

4.3.1 Operation of the pipeline would predominantly be through heart-cut mode.

4.4 Implementation Methodology

4.4.1 It is proposed to take up execution of the project through in-house expertise.

4.5 Statutory Clearances

4.5.1 Suitable actions will be taken for obtaining MoE&F clearance and other statutory

clearances for the proposed pipeline from concerned authorities, as applicable.

4.6 Construction Schedule

4.6.1 The proposed scheme is expected to be completed in a period of about 30 months after

receipt of statutory clearances.

4.7 Manpower Requirement

4.7.1 The manpower requirement would be about 82 during construction phase and about 76

for operation of the pipeline, excluding Line Patrolmen (LPM). The requirement of

LPM for the new portion of right-of-way is envisaged to be outsourced.

5.0 Capital Cost

5.1 The pipeline system from Ennore to Madurai is estimated to cost Rs.711 crore,

including a foreign exchange component of Rs.202 crore, at December 2012 price level.

This includes Rs.60 lakh required for modifications in unloading bays at Trichy and

Madurai bottling plants for their use as loading bays.

5.2 The cost estimates have been prepared on conservative basis without considering

benefits under EPCG (Export Promotion Capital Goods) scheme.

6.0 Operating Cost

6.1 Operating cost of the pipeline system includes the cost of power for mainline pumping

units, utilities, consumables, salaries and wages, administrative overheads, repair and

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( ix )

maintenance etc. The operating cost corresponding to throughput of 0.9 MMTPA is

estimated to be about Rs.30 crore per annum at December 2012 price level.

7.0 Financial Analysis

7.1 Capital cost of the project is considered to be financed through internal

resources/commercial borrowings. For the purpose of financial analysis, debt:equity

ratio of 1:1 has been considered, with interest @ 10.75% per annum and repayment in 8

equal annual installments, with one-year moratorium from the date of commissioning.

Requirement of working capital will be met through internal resources.

7.2 Financial analysis for the proposed pipeline system has been carried out taking into

account the following.

Capital cost of the pipeline and its operation for 15 years / 25 years

Throughput as indicated in the optimization study for 2016-17 and 2021-22

Corporate savings assessed in the optimization study, as revenue

Benefit due to lower transit loss in pipeline transportation compared to losses

permitted for transportation through road tankers

Savings in loading and decanting charges associated with road tankers on notional

basis

Results of the financial analysis are as under.

15 years’ Operation 25 years’ Operation

RoI (%) 16.2 17.5

RoE (%) 19.8 21.1

7.3 Sensitivity analysis has also been carried out, the results of which are as under.

Case 15 years’ Operation 25 years’ Operation

RoI (%) RoE (%) RoI (%) RoE (%)

Increase in capital cost by 10% 14.8 17.6 16.2 19.1

Increase in operating cost by 10% 16.0 19.4 17.3 20.7

Decrease in throughput by 10% 14.2 16.8 15.8 18.5

All the above together 12.6 14.3 14.3 16.3

Executive Summary–Ennore-Trichy-Madurai LPG Pipeline ( x )

7.4 Economics of Ennore-Trichy Pipeline

7.4.1 Sensitivity analysis has also been carried out considering termination of the pipeline at

Trichy itself. The return on investment improves marginally in this case.

15 years’ Operation 25 years’ Operation

RoI (%) 18.0 19.2

RoE (%) 22.1 23.2

8.0 Conclusions and Recommendations

8.1 Most of the LPG bottling plants in Tamil Nadu are situated at considerable distance

from Ennore. Optimization study indicates that there would be considerable savings by

laying a LPG pipeline from Ennore to Madurai via Chengalpet, Pondicherry and Trichy,

which would substitute road movement of LPG ex-Ennore to these bottling plants.

8.2 Results of the financial analysis indicate that the proposed pipeline is viable under most

of the scenarios considering the prevailing hurdle rate of 13%. The pipeline will

facilitate cost-effective transportation of LPG from Ennore to different bottling plants in

Tamil Nadu and one plant at Pondicherry.

8.3 IOC intends to lay several LPG pipelines to provide connectivity to its major LPG

bottling plants. With commissioning of LPG import terminal at Ennore and

implementation of Kochi terminal, potential exists to lay new LPG pipelines from these

two sources and formation of a LPG grid in south India in future. It would, therefore, be

prudent to lay the proposed Ennore-Trichy-Madurai LPG pipeline for providing pipeline

connectivity to all major bottling plants en route. Providing pipeline connectivity to

other major bottling plants in Tamil Nadu viz. Coimbatore, Salem and Erode could be

examined at a later stage.

8.4 Keeping the above in view, it is recommended to lay Ennore-Trichy-Madurai LPG

pipeline at an estimated cost of Rs.711 crore, including a foreign exchange component

of Rs.202 crore, at December 2012 price level. This includes cost of modifications in

Marketing facilities at Trichy and Madurai at an estimated cost of Rs.60 lakh.

***

DFR –Ennore-Trichy-Madurai LPG Pipeline Page 1 of 38

CHAPTER – I

1.0 INTRODUCTION

1.1 India is deficit in Liquefied Petroleum Gas (LPG). Industry imports LPG to the tune of

5 MMTPA to meet the domestic demand. South India, comprising Andhra Pradesh

(A.P.), Karnataka, Kerala and Tamil Nadu, is also deficit in LPG.

1.2 In 2010-11 and 2011-12, the deficit of LPG in southern region was about 2.8 MMTPA

and 3.0 MMTPA respectively. As per the latest supply-demand assessment, the

demand in south India is expected to be about 6.4 MMTPA in 2016-17 and about

7.3 MMTPA by 2021-22. Domestic availability of LPG would be about 4.3 MMTPA

and 4.5 MMTPA in those years. The deficit in 2016-17 is projected to reduce from the

present level of 3.0 MMTPA to 2.1 MMTPA, mainly due to additional production of

LPG after implementation of the proposed expansion plans at Chennai refinery of

Chennai Petroleum Corporation Limited (CPCL), Kochi refinery, Mangalore refinery

and Vizag refinery, and commissioning of Nagarjuna refinery. However, the deficit is

projected to increase again to 2.8 MMTPA in 2021-22, which would continue. This

deficit would be met by import of LPG through coastal receipts at Ennore, Vizag,

Mangalore and Kochi ports.

1.3 Presently, IOC operates 11 LPG bottling plants in Tamil Nadu viz. Ennore, Erode,

Ilayangudi, Madurai, Mannargudi, Mayiladuthurai, Salem, Trichy, Chengalpet,

Coimbatore and CPCL Chennai and 1 plant at Pondicherry.

1.4 M/s IndianOil Petronas Private Ltd. (IPPL), a Joint Venture of IOC and Petronas,

Malaysia have set up a LPG import terminal at Ennore, primarily to meet the deficit of

LPG in Tamil Nadu. The terminal has been commissioned and is in operation since

August 2012, handling about 100 TMT of LPG per month. It presently supplies LPG

to IOC’s bottling plants at Ennore, Ilayangudi, Trichy and Madurai in Tamil Nadu by

road tankers.

1.5 CPCL has monthly output of about 33 TMT of LPG, out of which IOC’s share is about

28 TMT. This LPG is predominantly used for meeting non-domestic requirement of all

bottling plants in Tamil Nadu, Cuddapah bottling plant in A.P. and about 50%


requirement of Devanagonthi bottling plant in Karnataka. Requirement of CPCL’s

bottling plant at Chennai is also met by CPCL refinery. Requirement of domestic LPG

in Tamil Nadu, Cuddapah and part requirement of Devanagonthi is met from LPG

import terminal at Ennore by road tankers.

1.6 As these bottling plants are situated at considerable distance from Ennore, an

optimisation study was carried out in 2011, which indicated that there would be

considerable savings if a LPG pipeline system was put in place from Ennore to Trichy

via Chengalpet and Pondicherry to substitute the road movement of LPG ex-

Chennai/Ennore to the bottling plants in Tamil Nadu and Pondicherry. Further, nodal

movement from Trichy was envisaged to reduce road movement to other bottling

plants in Tamil Nadu. LPG sourcing for bottling plants in other states of south India

would continue from the existing sources at Ennore, Mangalore, Vizag and the

proposed import terminal at Kochi.

1.7 Vide Agenda Item No. P/224 dated 23.4.2012, Board had accorded first-stage approval

to the proposal of laying a pipeline from Ennore to Trichy for transportation of LPG

and had approved an amount of Rs.5 crore for carrying out pre-project activities, so as

to facilitate preparation of Detailed Feasibility Report (DFR) for the proposal. The

Board had also advised to carry out study of various alternatives of pipeline

connectivity to more bottling plants in Tamil Nadu.

1.8 Subsequent to the first-stage approval, survey of the pipeline route has been

completed. Based on the optimisation study for different pipeline configurations,

preliminary analysis of various alternatives was carried out and the two best options

were short-listed for preparation of the detailed scheme and cost estimates, manpower

assessment and financial analysis etc. This study concluded that Ennore-Trichy

pipeline and Ennore-Trichy-Madurai pipeline would be the two financially most

attractive pipeline configurations. The study has been covered in details in Chapter-II.

1.9 Based on the above analysis, CO(Optimisation) undertook another study in January

2013, considering updated demand numbers for working out throughput and savings

for the two pipeline configuration i.e. Ennore-Trichy pipeline and Ennore-Trichy-

Madurai pipeline. IOC already has a petroleum product pipeline from Chennai to

Madurai due to which right-of-way (RoW) up to Madurai is already available.

Therefore, considering availability of most of the right-of-way up to Madurai and


marginal difference in Return-on-Investment (RoI) for pipeline up to Trichy vis-à-vis

pipeline up to Madurai, it is considered prudent to undertake detailed feasibility study

including viability study for laying the pipeline up to Madurai. The DFR has been

prepared accordingly.

1.10 The DFR broadly deals with the need and justification, system configuration, cost,

viability, implementation methodology and allied details in respect of the proposed

pipeline from Ennore to Madurai via Trichy. The pipeline would originate at Ennore

import terminal and terminate at the existing Madurai bottling plant, providing pipeline

connectivity en route to the existing LPG bottling plants at Chengalpet, Pondicherry

and Trichy.


CHAPTER - II

2.0 ANALYSIS OF ALTERNATIVES

2.1 While analyzing the proposal seeking first-stage approval for Ennore-Trichy LPG

pipeline, a view emerged that options be explored for minimizing nodal movement

through road tankers and, instead, feeding additional bottling plants in the region

through the pipeline itself. Accordingly, a preliminary feasibility study was carried out

for linking the proposed Ennore-Trichy LPG pipeline with 6 major bottling plants in

Tamil Nadu viz. Chengalpet, Trichy, Madurai, Salem, Erode and Coimbatore and one at

Pondicherry. The study indicated that Ennore-Trichy pipeline configuration was

financially most attractive among various pipeline alternatives.

2.2 Accordingly, IOC Board accorded first-stage approval to the proposal of laying a

pipeline from Ennore up to Trichy for transportation of LPG and sanctioned an amount

of Rs.5 crore for carrying out pre-project activities, so as to facilitate preparation of

Detailed Feasibility Report (DFR) for the proposal. At the same time, Board also

advised to carry out study of various alternatives for connectivity of more bottling plants

in Tamil Nadu.

2.3 In the mean time, a proposal for LPG terminal at Kochi proposal was revived, and was

approved by the Board in December 2012. This development was a major change in the

basic premises considered for preparation of Ennore-Trichy LPG pipeline proposal, as

feasibility report of Ennore-Trichy pipeline was based on the optimization study

considering without LPG import facilities at Kochi. Approval of the proposed LPG

import facilities at Kochi mandated fresh optimization study for the proposed pipeline.

Accordingly, an optimization study was carried out in September 2012, considering

import facilities at Kochi functional by 2016-17.

2.4 Findings of the optimization study of September 2012 were as under.


Scenario Delivery locations directly

linked with Pipeline

Projected Throughput and Savings

2016-17 2021-22


Trichy)

494 TMT

Rs.64 crore

755 TMT

Rs.117 crore


Trichy, Madurai)

494 TMT

Rs.73 crore

755 TMT

Rs.130 crore


Trichy, Salem)

494 TMT

Rs.74 crore

755 TMT

Rs.132 crore


Trichy, Madurai, Salem)

494 TMT

Rs.82 crore

755 TMT

Rs.146 crore


Trichy, Salem, Erode and

Coimbatore)

494 TMT

Rs.78 crore

755 TMT

Rs.153 crore


Trichy, Madurai, Salem,

Erode and Coimbatore)

494 TMT

Rs.82 crore

755 TMT

Rs.165 crore

From the above details, it emerged that throughput of the pipeline would remain the

same in any combination of linked bottling plants.

2.5 Preliminary analysis of various alternatives was then carried out and the two best options

were short-listed for preparation of the detailed scheme and cost estimates, manpower

assessment and financial analysis etc.

Findings of the study were as under.

Scenario Length

(km)

Operating

Manpower

Capex

(Rs. crore)

Opex

(Rs. lakh)

RoI

(15 years)

Ranking

based on

Financial

Attractiveness

1. 494 64 581 30 12.9 1

2. 615 78 719 36 11.1 2

3. 620 92 736 37 10.7 3

4. 742 102 873 42 9.7 4

5. 810 120 948 47 8.6 5

6. 932 130 1068 51 6.4 6


2.6 This study concluded that Ennore-Trichy pipeline and Ennore-Trichy-Madurai pipeline

would be the two financially most attractive pipeline configurations.

2.7 Based on the above analysis, CO(Optimisation) undertook another study in January

2013, considering updated demand numbers for working out throughput and savings

for the said two pipeline configurations. Summary Report of this study is given in

Attachment 2.1.

2.8 Considering availability of most of the right-of-way up to Madurai and marginal

difference in return on investment (RoI) for pipeline up to Trichy vis-à-vis pipeline up to

Madurai, it was considered prudent to undertake proposal for laying the pipeline up to

Madurai.

2.9 Accordingly, the DFR has been prepared for 615 km long Ennore-Trichy-Madurai

LPG pipeline.


CHAPTER - III

3.0 NEED AND JUSTIFICATION

3.1 The demand of LPG in south India in 2011-12 was about 4.5 MMTPA. As per the

latest LPG supply-demand workings by Marketing Division, LPG demand of Industry

for south India is projected as under.

Fig. in MMT

Year 2016-17 2018-19 21-22

South India Demand 6.4 6.8 7.3

3.2 Considering actual demand of previous year, projected growth rate in the demand and

supply scenario, CO(Optimisation) has carried out optimization study for proposed

Ennore-Trichy-Madurai LPG pipeline for 2016-17 and 2021-22. This study projects

throughput of 617 TMT in 2016-17 and 809 TMT in 2021-22 for the pipeline and

substantial savings in logistics cost for transportation of LPG. The financial analysis of

laying own LPG pipeline vis-à-vis use of alternate mode i.e. road has been covered in

details in Chapter-VIII.

3.3 At present, CPCL refinery is producing about 33 TMT of LPG per month. CPCL’s

LPG is primarily used for bottling plant at Chennai, non-domestic requirement of

bottling plants in Tamil Nadu, Cuddapah in A.P. and partial requirement of

Devanagonthi bottling plants.

3.4 Most of domestic requirement of LPG at IOC’s bottling plants in Tamil Nadu,

Cuddapah in A.P. and partial requirement of Devanagonthi is met from LPG import

terminal at Ennore by Road Tankers.

3.5 Throughput Projections

3.5.1 The supply and distribution plans of LPG for various bottling plants linked to the

proposed pipeline, for 2016-17 and 2021-22, have been projected to be as under.

Fig. in TMT

Supply Distribution

Ennore port

2016-17 2021-22 2016-17 2021-22

617 809 Chengalpet 138 180


Supply Distribution

Ennore port

2016-17 2021-22 2016-17 2021-22

Pondicherry 43 44

Trichy 273 385

Madurai 163 200

Nodal movement from Trichy (134) (235)

- Salem 101 112

- Erode 3 81

- Coimbatore 30 42

Nodal movement from

Madurai

(24) (50)

- Ilayangudi 18 43

- Tirunelveli 6 7

Bottling Plant at Trichy 139 150

Bottling Plant at Madurai 139 150

Total 617 809

3.5.2 It may be seen from the above table that out of the projected throughput of 617 TMT

for 2016-17, about 134 TMT and 24 TMT of LPG would be transported through road

from Trichy and Madurai respectively. Similarly, out of the projected throughput of

809 TMT for 2021-22, about 235 TMT and 50 TMT of LPG would be transported

through road from Trichy and Madurai respectively.

Schematic presentations of section-wise projected throughput and nodal movements

for 2016-17 and 2021-22 are given at Attachment 3.1 and 3.2.

3.6 The long-term projected throughput for the pipeline would be as under. For working

out projected demand beyond 2021-22, growth rate of 1.76% has been considered, as

assessed by the Planning Cell of Marketing Division. As the pipeline would originate

from Ennore import terminal, the additional demand would be met by increasing the

imports.

Throughput Projections (TMT)

2016-17 2021-22 2026-27

617 720 786


3.7 It is pertinent to mention here that while some of the bottling plant capacities are

projected to be saturated during 2016-17, the demand in attached markets would

continue to increase. Therefore, it would be required to either stretch the capacities of

the existing plants or set up new bottling plants in and around the existing markets to

meet the increased LPG demand as required. Therefore, the pipeline facilities have

been designed considering long-term demand projections.

3.8 For facilitating nodal movement to linked bottling plants from Trichy and Madurai, the

existing unloading bays would be converted to loading bays.

3.9 The transportation requirement of LPG volumes indicated in para 3.6 can be met by

the following alternative modes.

a) By Road

b) By Pipeline

Railway has not been considered as a feasible transportation option for LPG as the

existing bottling plants do not have rail linkage.

3.10 It has been established the world over that pipelines are superior means for

transportation of petroleum products compared to other modes viz. rail, road, tankers

etc. due to their inherent advantages like reliability, economy, safety, flexibility, low

energy consumption, low transit losses and negligible impact on environment.

Construction of new pipelines provides relief to other modes of transportation for

movement of essential commodities and passengers.

3.11 In view of the above, it is proposed to lay Ennore-Trichy-Madurai LPG pipeline for

transportation of LPG from Ennore to the LPG bottling plants at Chengalpet,

Pondicherry, Trichy and Madurai. The proposed pipeline would realign movement of

LPG for certain other bottling plants viz. Salem, Coimbatore, Erode, Ilayangudi and

Tirunelveli from Trichy and Madurai in place of Ennore. Thus, the proposed pipeline

would considerably reduce distances involved in road movements and thereby,

logistics cost.


Attachment 3.1


Attachment 3.2


CHAPTER - IV

4.0 DESIGN PHILOSOPHY

4.1 Introduction

4.1.1 This chapter covers the basic data and design parameters adopted for preparing this

report.

4.2 Products to be handled

4.2.1 The proposed Ennore-Trichy-Madurai LPG pipeline is envisaged to be used for

transportation of LPG.

4.3 Product Characteristics

4.3.1 The pipeline system has been designed on the basis of the following characteristics of

LPG.

Specific Gravity : 0.54

Kinematic Viscosity : 0.29 cst

4.4 Design Capacity

4.4.1 The pipeline has been designed for a capacity of 0.9 MMTPA under heart-cut

operation philosophy.

However, it would be possible to stretch the capacity up to 0.95 MMTPA with existing

facilities to take care of seasonal variations in demand.

4.5 Design Parameters

4.5.1 For mainline as well as station piping, a weld joint factor of 1.00 (one) has been

considered.

4.5.2 Maximum allowable operating pressure (MAOP) of the system is based on 72% of the

specified minimum yield strength of the pipe material.

4.5.3 The pipeline system has been designed considering round the clock operation on three-

shifts a day basis.


4.5.4 No corrosion allowance has been considered in the wall thickness of the pipe, as

effective corrosion mitigation measures would be provided in the system.

4.5.5 Pipes of higher wall thickness are envisaged to be laid across major rivers, water

courses etc. At rail and road crossings, where casing pipe would be provided, the pipe

wall thickness would remain same as that for the main pipeline.


CHAPTER-V

5.0 PROJECT DESCRIPTION

5.1 Introduction

5.1.1 This chapter broadly deals with various features of the project viz. pipeline sizing,

pipeline route, system configuration, facilities required, cathodic protection,

telecommunication & telesupervisory system, implementation methodology,

construction schedule etc. for laying a LPG pipeline from Ennore to Madurai.

5.2 Pipeline Size Optimization

5.2.1 Different alternative pipe sizes have been considered for the pipeline system. The

alternatives have been compared on the basis of the present value of costs, worked out

at 13% rate of discount, over 15 years of operation. Results of the study indicate that

the pipeline system using 10.75” OD x 0.25” WT for Ennore-Trichy section;

8.625” OD x 0.25” WT for Trichy-Madurai and branches to Pondicherry and Trichy of

8.625” OD x 0.25” WT would be the optimum pipeline configuration for given

projected throughput.

5.3 Hydraulics and System Configuration

5.3.1 Based on the pipeline throughput requirements, hydraulic details have been worked

out. Details are as under.

Length (km) : 615 km

Section wise Capacity (MMTPA) / Flow Rate (kl/hr)

Ennore to Chengalpet : 0.90 (208 kl/hr)

Chengalpet to T-Point for Pondichérry : 0.80 (185 kl/hr)

Pondichérry T-Point to T-Point for Trichy : 0.70 (162 kl/hr)

T-Point for Trichy to Madurai : 0.30 (69 kl/hr)

Branch to Pondicherry : 0.10 (23 kl/hr)

Branch to Trichy : 0.45 (104 kl/hr)


Line Size /MAOP

Section Line Size MAOP

OD (inch) Dia (inch) Grade (mcl) (Kg/cm2)

Ennore- T Point for Trichy 10.75 0.25 API-5L X52 2267 122

T Point for Trichy to Madurai

8.625 0.25 API-5L X46 2500 135 Branch to Pondicherry BP

Branch to Trichy BP

Hydraulics (Considering simultaneous heart cut delivery at all ToPs)

S.

No. Station

Chainage(#)

(km)

Altitude

(m)

SDH

(mcl)

RH

(mcl)

No. of

Pumping

Units

1. Ennore 0 2 1723 - (2+1)

2. Chengalpet 125 22 - 1270 -

3. Pondicherry TP 226 64 - 946 -

4. Trichy TP 419 128 - 464 -

5. Madurai 541 204 - 222 -

Pondicherry BP 55 ex-TP 12 - 988# -

Trichy BP 19 ex-TP 113 - 423# -

km: Kilometre, m: Metre, mcl: Metre Column of Liquid(LPG), SDH: Station Discharge

Head, RH: Residual Head

# Actual RH before pressure control valve. To be brought down to 222 mcl for delivery.

Hydraulic gradient is placed at Annexure-I.

5.4 System requirements

5.4.1 Configuration of the pipeline system broadly comprises the following.

Total length: 615 km

419 km long, 10.75” OD x 0.25” WT pipeline section from Ennore to T-Point

location for Trichy bottling plant

55 km long, 8.625” OD x 0.25” WT branch pipeline from T-point to

Pondicherry and 19 km long, 8.625” OD x 0.25” WT branch pipeline from T-

point to Trichy


122 km long, 8.625” OD x 0.25” WT, branch pipeline from T-point location

for Trichy to Madurai

2 booster pumps and 3 motor-driven mainline pumping units with variable

frequency drive at Ennore

Scraper facilities at T-point locations for branches to Pondicherry and Trichy

bottling plants

Delivery facilities at Chengalpet, Pondicherry, Trichy and Madurai

Schematic flow diagram of the pipeline system is given in Annexure-II.

5.5 Pipeline route

5.5.1 The proposed pipeline would originate at IPPL’s LPG import facilities at Ennore and

would follow an independent route for approximately 30 km, where it would meet the

existing RoW of Chennai-Trichy-Madurai Pipeline (CTMPL) at its chainage 27.4 km.

Thereafter, the pipeline would follow the RoW of CTMPL up to Madurai via Asanur

except for about 5.3 km detour for linking Chengalpet bottling plant, about 55 km to

Pondicherry bottling plant and about 19 km to Trichy. The pipeline, after leaving

CTMPL RoW near Madurai delivery station of CTMPL, would further follow an

independent route for about 28 km to reach the bottling plant at Madurai. An indicative

route map is enclosed as Annexure-III.

5.5.2 The terrain along the pipeline route is mostly flat and plain with agricultural and paddy

field, which also includes stretches of rocky terrain and low lying area in between. The

pipeline would be provided with motor operated sectionalisation valves (SVs) at

regular intervals all along the pipeline route including providing additional motor

operated SVs at both sides of each major river/ canal crossings. These mainline SVs

would be provided as per the provisions of OISD-214.

5.5.3 The pipeline would cross a number of rivers, canals, nallas, roads and railway tracks.

The pipeline across major perennial rivers/canals are proposed to be installed by using

Horizontal Directional Drilling (HDD) technique, whereas across minor rivers/ canals,

pipeline would be laid by submerged crossing method. Provision has also been kept for

installing pipeline by HDD technique across selected National/ State Highways.

Pipeline across railway crossings and selected National/State Highways would be laid

by using bored cased crossing method.


5.6 Pump Station and Facilities

5.6.1 Civil

5.6.1.1 Civil structures are envisaged to be erected at the stations to provide shelter to men and

machinery. Pump shed and booster shed to accommodate the pumping units with

associated facilities have been planned to be of steel structure. The civil structures

would also be provided to house control panels, MCC panels, HT/LT panels, batteries,

etc. All the safety factors like wind load, seismic load, soil bearing capacity etc. would

be taken into account while designing the civil structures.

Facilities such as pump shed, control building, HT/LT panel rooms, VFD room,

workshop, stores, watchman cabin, etc. have been envisaged at Ennore pump station,

whereas facilities like control building, MCC building, workshop, store, watchman

cabin, etc. have been envisaged at each LPG delivery station locations.

5.6.1.2 Provision of land acquisition/ purchase has been kept for T-Point locations and for new

RCP/ SV stations along the mainline route.

5.6.2 Cathodic protection system

5.6.2.1 Temporary Cathodic Protection system with the requisite design life is envisaged

during the construction phase using the Mg anodes in line with OISD guidelines.

To mitigate the external corrosion of mainline, impressed current cathodic protection

system shall be provided. The system envisages impressed current anodes with AC/AC

cum DC operated cathodic protection inputs having uninterrupted power supply

arrangement.

5.6.3 Mechanical

5.6.3.1 Motor driven mainline pumping units (MLPUs) having variable frequency drive

(VFD) and horizontal spilt case centrifugal pump shall be installed at Ennore pumping

station with 2+1 (2 running and 1 standby) combination. Provision has been kept for

booster pumps at Ennore.

5.6.3.2 Piping system shall be designed as per ASME B 31.4 standard. Pipes, pipe fittings,

flanges etc. will conform to International Standards such as API 5L, ASTM A 106

Grade B / A333 Gr-6, ANSI B-16.5, ANSI B-16.25, WPB-234, MSS-SP-44, MSS-SP-

75 etc. and will be suitable for ANSI-600 and ANSI 300 pressure classes. Gate valves,

ball valves, swing check valves will conform to API 6D standards. Electric motor

actuators of suitable power ratings will be installed for the operation of valves. Pigging

facilities have been considered.


5.6.4 Fire Fighting System

5.6.4.1 Fire detection & alarm system: For the Control building, smoke detectors and rate of

rise (RoR) heat detectors along with Fire Alarm Panel and SIL-3 rated PLC with HMI

have been considered for all attended stations. For Pump house, Ultra Violet/ Infrared

flame detectors, RoR heat detectors have been considered. HC detectors and smoke

detectors have been considered for all RCPs and T-points.

5.6.4.2 Fire Suppression system: Besides portable Fire extinguishers, CO2 flooding would be

provided in cable trenches, hydrants. Water monitors would be provided suitably in the

piping area. The numbers and type of extinguisher would be in line with OISD 214.

The piping would be hooked with IPPL fire water network at Ennore to meet any

exigency requirement. Firewater network (with required number of Water monitors

and hydrants with double landing valves) would be provided at LPG delivery locations

and the same would be hooked with marketing fire water network at all the exiting

bottling plants. Gas Monitoring System has been considered for MLPU and piping

area. Medium Velocity Water Sprinkler system considered for MLPU and piping and

metering and scrapper barrel area.

5.6.5 Electrical

5.6.5.1 The electrical system at Ennore would be designed for receiving power supply at

33 KV level through independent feeder from state electricity board/port authority.

33/6.6 KV, 6 MVA outdoor switchyard works have been envisaged for this purpose.

The prime movers would be 6.6 KV Motors with AC Variable Speed Drive for energy

saving during variable speed requirement. Ennore being the mother station, one 6.6

KV, 2 MVA HT DG Set has been considered for running the station in case of mains

power failure.

5.6.5.2 Building lighting & air conditioning, HT & LT Panel with battery back-up and High

Masts for outdoor lighting would be provided. All cabling would be XLPE insulated as

per IS-7098. All lighting luminaries would be energy efficient and flame-proof

certified for battery area. APFC Panel would also be provided to maintain power factor

near unity.

5.6.5.3 At Chengalpet, Pondicherry, Trichy and Madurai, incoming grid supply has been

considered at LT 415V level through Marketing installation connection. For back-up

supply DG Set with Auto-Mains failure would be provided.


5.6.6 Instrumentation and Station Control Centre

5.6.6.1 All stations would be provided with hot standby PLC based station control system to

perform local control functioning and to monitor and report local conditions (except at

block valves (BV) / river MOV locations / sectionalizing valve (SV) locations where

non-redundant PLC / RTUs shall be provided).

5.6.6.2 The field instrumentation at all the attended stations would comprise pressure

transmitters, pressure switches, pressure gauges, mass flow meters, temperature gauge,

temperature transmitter, scraper detector, emergency shut down switches etc.

5.6.6.3 All SV locations would be provided with RTUs for operation of MOVs from MCS in

case of exigencies.

5.6.6.4 Station Control Centre (SCC) would have workstations as operator interface to the

station instrumentation and control system, on dual local area network (LAN) in client

server mode.

5.6.6.5 230 V UPS system with dual battery back up (4 hours) would be provided at all the

attended stations.

5.6.7 Telecommunication system

5.6.7.1 A dedicated state of the art OFC based, SDH communication system with 99.9%

availability along with IP/E1 based new EPABX Systems at all attended stations. This

would be over and above existing fibre of CTMPL (in common ROW stretch) serving

as a mutual back-up medium for both the pipelines.

5.6.7.2 RTU data & CCTV requirements of SV locations all along the LPG pipeline shall be

catered by extending the network connectivity using additional/ spare fibre from the

nearest attended station.

5.6.7.3 Network management system has been considered for the SDH network at Ennore and

Madurai.

5.6.7.4 Master Network Video Recorder (NVR) at Ennore with failover Network Video

Recorder (NVR) at Trichy. The Control Centre for CCTV System with Network Video

Recorder (NVR) (with client PC) shall be at all attended stations.

5.6.7.5 Dedicated power systems (Battery charger + battery bank), solar power system and

electronic perimeter security system considered at all locations.

5.6.7.6 VHF System, consisting of one base Station with 4 hand-held sets for delivery stations

and one base Station with 6 hand-held sets for pumping station at Ennore has been

considered.


5.6.8 Supervisory Control and Data Acquisition (SCADA) System

5.6.8.1 The telesupervisory system for the proposed pipeline is envisaged to have dual hot

stand-by computer system in client-server mode for monitoring and control of pipeline

from Master Control Station (MCS) envisaged at Ennore. In the event of failure of the

duty machine, the hot stand-by machine will take over the role of the duty machine

instantaneously, without affecting the operational continuity and loss of data, thereby

ensuring high reliability of the system. The telesupervisory system will work in

Master-Slave configuration, having its slave stations at attended stations and at block

valve locations, installed along the entire pipeline network. The master station shall be

interfaced with slave stations over OFC telecom system over Wide Area Network for

data acquisition and control.

5.6.8.2 MCS at Ennore would be equipped with SCADA software running under multi-

programming, multi-tasking real time operating system environment. The SCADA

software would have features for control & monitoring of all locations including Block

valves. Leak Detection system shall be provided and the Leak Detection Software shall

run in a separate machine at MCS. This package will enable the operator to take

optimal control actions and thus ensure the safety and security of the pipeline network.

Typical MCS, SCC, T-Point configurations and RTU configuration at RCP/SV are

indicated in Annexure-IV(a) to IV(d).

5.7 Operation Philosophy

5.7.1 Operation of the pipeline would predominantly be through heart-cut mode.

5.8 Implementation Methodology

5.8.1 It is proposed to take up execution of the project through in-house expertise.

5.9 Statutory Clearances

5.9.1 Suitable actions will be taken for obtaining MoE&F clearance and other statutory

clearances for the proposed pipeline from concerned authorities, as applicable.

5.10 Construction Schedule

5.10.1 The proposed scheme is expected to be completed in a period of about 30 months after

receipt of statutory clearances. The schedule is shown in Annexure-V.


5.11 Manpower Requirement

5.11.1 The manpower requirement would be about 82 during construction phase and about 76

for operation of the pipeline, excluding Line Patrolmen (LPM). The requirement of

LPM for the new portion of right-of-way is envisaged to be outsourced.


CHAPTER-VI

6.0 CAPITAL COST

6.1 The pipeline system from Ennore to Madurai is estimated to cost Rs.711 crore,

including a foreign exchange component of Rs.202 crore, at December 2012 price level.

This includes Rs.60 lakh required for modifications in unloading bays at Trichy and

Madurai bottling plants for their use as loading bays.

6.2 The project cost for pipeline facilities has been estimated on the basis of the following.

Cost actually incurred in the past with appropriate escalation

Establishing physical requirements, preliminary specifications and in-house cost

data

Experience of virtually identical projects elsewhere to establish physical

requirements and cost

Experience of slightly different projects adjusted approximately to establish

physical requirements and budgetary quotations

Experience of similar projects in value/terms adjusted for price difference by past

experience and escalation data

6.3 Survey and field engineering

6.3.1 This cost includes the cost of surveys, sub-soil investigation & field engineering.

6.4 Land acquisition, ROW and crop compensation

6.4.1 Land requirement for T-Point locations, SVs/RCPs etc. has been taken on the basis of

permanent land acquisition. ROW compensation and crop compensation has been

suitably considered.

6.4.2 Cost of colony has not been considered as the pumping stations/ delivery stations are

envisaged near urban/ semi urban areas.

6.5 Project management & engineering, insurance

6.5.1 The proposed scheme is expected to be completed in a period of 30 months after

receipt of statutory clearances. The cost of project management & engineering is

estimated on the basis of this envisaged time schedule. The manpower requirement


during construction phase would be about 82. However, it would be reviewed again

before start of construction activities.

6.6 Mainline Pipes & Materials

6.6.1 The cost of pipe and coating has been considered as per the latest data available. The

cost of mainline materials required such as casing pipe, coating and wrapping materials,

valves etc. has been estimated on the basis of budgetary offers and cost actually

incurred in recent past on similar items.

6.7 Mainline Construction

6.7.1 The cost of mainline construction has been estimated on the basis of the cost incurred in

similar project executed elsewhere, suitably adjusted to bring it to December 2012 price

level.

6.8 Pump Station and Terminal

6.8.1 The cost under this head includes the cost of mechanical, civil, electrical and

instrumentation & control facilities which mainly comprise the mainline pumping units

including prime movers, valves, scraper barrels, fire alarm & detection system, fire

hydrant network & related facilities, Power-cum-Motor Control Center, PLC based

control system, control buildings etc. including the erection and installation of requisite

facilities.

For facilitating nodal movement to linked Bottling plants from Trichy and Madurai, the

existing unloading bays would be utilized as loading bays.

6.9 Cathodic Protection

6.9.1 This includes the cost of materials required for temporary and permanent cathodic

protection, installation & commissioning of equipment/materials, CP rectifier units,

ground beds, cable etc. Estimates are based on budgetary offers and the rates from

similar projects executed in the recent past.

6.10 Telecommunication and Telesupervisory System

6.10.1 Cost estimates are based on budgetary offers/earlier purchase orders, adjusted suitably.

6.11 Escalation

6.11.1 No provision has been made for price escalation during the period of execution of the

project and, as far as possible, the estimates have been prepared on the basis of the costs


prevalent in December 2012. However, provision for contingencies to the tune of 5%

has been kept in the cost estimates, which is considered to be adequate to cover

unforeseen factors.

Summary of capital cost is given in Attachment-6.1.


Attachment-6.1

Ennore-Trichy-Madurai LPG Pipeline

Capital Cost

(December 2012 price level)

(Rs. in Lakh)

No. Description of Item FE Rupees Total

A. Pipeline Facilities

1. Survey & Field Engineering 0 588 588

2. Land Acquisition, ROW & Crop

Compensation 0 1309 1309*

3. Mainline Pipes 15890 6975 22865

4. Mainline Materials 534 405 939

5. Mainline Construction 0 12805 12805

6. Pump Station and Terminal 2783 13993 16776

7. Cathodic Protection 46 1210 1256

8. Telecommunication & Telesupervisory 0 4048 4048

Sub-total 19253 41333 60586

Contingencies 963 2067 3030

Project Management and

Engineering, Insurance 0 3817 3817

Interest During Construction 0 3602 3602

Total (Pipelines Facilities) 20216 50819 71035

B. Modifications in Marketing Facilities 0 60 60

Total (A+B) 20216 50879 71095

Say, Rs. crore 202 509 711

Exchange Rates: 1 US $ = Rs.54.61

*Including cost of land i.e. Rs.628 Lakh


CHAPTER-VII

7.0 OPERATING COST

7.1 Operating cost of the pipeline system includes the cost of power for mainline pumping

units, utilities, consumables, salaries and wages, administrative overheads, repair and

maintenance etc.

The operating cost corresponding to throughput of 0.9 MMTPA is estimated to be about

Rs.30 crore per annum at December 2012 price level.

Details of the operating cost are given in Attachment-7.1.

7.2 Basis of estimation

7.2.1 Fuel/Power (Electricity)

The project envisages motor driven pumping units at Ennore. For the purpose of

operating cost calculations, tariff for electricity has been considered @ Rs.5.00 per unit.

7.2.2 Utilities

7.2.2.1 Power

Power is also required for operation of the auxiliaries & controls etc. and for

illumination at the stations. Requirement of power is planned to be drawn from State

Grid or by increasing contract demand of existing electricity connections at bottling

plants, if required, and extending to pipeline facilities.

7.2.2.2 Water

There is no major requirement of water for operation of the pipeline system. Water for

fire-fighting will be drawn from the Fire water network of existing facilities of

Marketing.

7.2.3 Manpower

7.2.3.1 The cost towards salaries and wages shown against the labour component in the

operating cost is based on the estimated manpower requirement on the existing scales of

pay and allowances. The manpower requirement, which would be around 82 during

construction and around 76 for operation phase, has been worked out on the basis of


prevailing norms and practices. The requirement of manpower is expected to be met

through internal deployment as well as by induction of competent personnel, who will

be trained to operate the system.

7.2.4 Repair and Maintenance

7.2.4.1 Repair and maintenance of the mainline has been considered to be about 1% of the

investment in the mainline. Similarly, repair and maintenance of the stations has been

considered to be about 2% of the investment on stations, telecommunication &

telesupervisory system.

7.2.5 General Administration Expenses

7.2.5.1 The cost under this head covers management expenses including security services,

insurance of facilities etc. being proposed in the pipeline system.


Attachment-7.1


Operating Cost

(December 2012 price level)

(Rs. in Lakh)

S. No. Description of Item Cost per Annum

1. Power (for prime movers) 323

2. Utilities

Power & Water 29

3. Manpower 1176

4. Repair & Maintenance

a) Mainline 379

b) Pump Station and others 416

5.

Other Expenses

a) General Administration Expenses

b) Insurances

646

55

Total 3024

(Say, Rs. 30 crore)


CHAPTER - VIII

8.0 FINANCIAL ANALYSIS

8.1 Project Financing

8.1.1 Capital cost of the project is considered to be financed through internal

resources/commercial borrowings. For the purpose of financial analysis, Debt:Equity

ratio of 1:1 has been considered, with interest rate of 10.75% per annum and repayment

in 8 equal installments, with one year moratorium from the date of commissioning.

Requirement of working capital will be met through internal resources.

8.2 Financial Analysis

8.2.1 Financial analysis for the proposed pipeline system has been carried out taking into

account the following.

Capital cost of the pipeline and its operation for 15 years / 25 years

Throughput as indicated in the optimization study for 2016-17 and 2021-22

Corporate savings, as assessed in the optimization study, as Revenue

Benefit due to lower transit loss in pipeline transportation compared to losses

permitted for transportation through road tankers

Savings in the loading and decanting charges associated with road tankers on

notional basis

Results of the financial analysis are as under.

15 years’ operation 25 years’ operation

ROI (%) 16.2 17.5

ROE (%) 19.8 21.1

8.2.2 Sensitivity analysis has also been carried out, the results of which are as under.

Case

15 years operation 25 years operation

ROI (%) ROE (%) ROI (%) ROE (%)

Increase in capital cost by 10% 14.8 17.6 16.2 19.1

Increase in operating cost by 10% 16.0 19.4 17.3 20.7


Case

15 years operation 25 years operation

ROI (%) ROE (%) ROI (%) ROE (%)

Decrease in throughput by 10% 14.2 16.8 15.8 18.5

All the above together 12.6 14.3 14.3 16.3

8.2.3 Economics of Ennore-Trichy Pipeline

8.2.3.1 If pipeline is terminated up to Trichy, the results of financial analysis would be as

under.

15 years’ operation 25 years’ operation

ROI (%) 18.0 19.2

ROE (%) 22.1 23.2

8.2.4 It is seen from the above that the proposed pipeline is viable under most of the

scenarios considering the prevailing hurdle rate of 13%. The pipeline will facilitate

cost-effective transportation of LPG from Ennore to LPG bottling plants at

Chengalpet, Pondicherry, Trichy and Madurai.


CHAPTER – IX

9.0 CONCLUSIONS AND RECOMMENDATIONS

9.1 With commissioning of IPPL’s LPG import terminal at Ennore, which was set up

primarily to meet the deficit of LPG in Tamil Nadu, requirement of domestic category

of LPG for various bottling plants in Tamil Nadu, Cuddapah in A.P. and part

requirement of Devanagonthi is met from Ennore by road tankers.

9.2 Most of the LPG bottling plants in Tamil Nadu are situated at considerable distance

from Ennore. Optimization study indicates that there would be considerable savings by

laying a LPG pipeline from Ennore to Madurai via Chengalpet, Pondicherry and

Trichy, which would substitute road movement of LPG ex-Ennore to these bottling

plants.

9.3 The proposed pipeline will facilitate cost-effective transportation of LPG from Ennore

to different bottling plants in the state of Tamil Nadu and also at Pondicherry in a safe,

cost-effective, environment-friendly and reliable manner. The pipeline would replace

significant movement of LPG by road tankers and would thus provide relief from

problems associated therewith

9.4 In view of the above, it is proposed to lay Ennore-Trichy-Madurai LPG pipeline which

would originate at Ennore and terminate at existing Madurai bottling plant, providing

pipeline connectivity en route to the existing LPG bottling plants at Chengalpet,

Pondicherry and Trichy.

9.5 Results of the financial analysis indicate that the proposed LPG pipeline is viable

considering the prevailing hurdle rate of 13%.

9.6 Keeping the above in view, it is recommended to consider this pipeline at an estimated

cost of Rs.711 crore including a foreign exchange component of Rs.202 crore, at

December 2012 price level.

9.7 The project is estimated to be completed in a period of about 30 months after receipt of

all statutory clearances.


9.8 Accordingly, this report is submitted for approval of the Board to the above

recommendations.

***

ANNEXURES

Hydraulic Gradient


2600

2800

Considering Heart Cut Operation

MAOP

1800

2000

2200

2400

1723 MCL

MAOP

1200

1400

1600

1800

L)

1723 MCL

600

800

1000

00

Hea

d (

MC

L

RH-1270 MCL

RH-946 MCL

0

200

400

0 50 100 150 200 250 300 350 400 450 500 550

RH- 222 MCL

RH-464 MCL

0 50 100 150 200 250 300 350 400 450 500 550

Chainage (km)

Station Ennore T-Point to Trichy

An

nChengalpet T Point to Pondicherry Madurai

Chainage (Km)

Altitude (M)

0

2

419

128

exure-I

125

22

226

64

541

204

Schematic Flow Diagram


10 75” OD

g

10.75” OD

From IPPL EnnoreStorageTanks

10.75” OD

Ennore(Ch. 0 km)

Chengalpet(Ch. 125 km) T-Point for Pondicherry

(Ch.226 km)

8.625” OD

10.75” OD

8.625” OD

Pondicherry(55 km ex T-Point)

T-Point for Trichy(Ch.419 km)

Madurai(Ch. 541 km) 8.625” OD

LEGEND

Pumping Unit (Operating)

Scraper Barrel

An

nex

Trichy(19 km ex T-Point)

(Operating)

Marketing Storage Tanks

Valves

xure -

II

Pumping Unit (Stand By)

Route Map

Annexure-III


Pump StationDelivery Station Proposed LPG Pipeline

Typical SCC Configuration


DUAL REDUNDANT SCC SERVERS

STATION-IN-CHARGETERMINAL

DUAL REDUNDANT OPERATOR WORKSTATION

ENGINEERING TERMINAL

yp g

DUAL REDUNDANT 100 MBPS ETHERNET LAN

LASERJET

ROUTER

TO MCS

FRONT END SERVER

DUAL REDUNDANT PLC – 32 BIT

LASERJETPRINTER

DOT MATRIXPRINTER

FIELD

TO RCP LOCATIONS

DEVICES

FLOWCOMPUTER

An

nexu

re

Chengalpet, Pondicherry , Trichy and Madurai Stations

e-IV(a)

Typical MCS Configuration at Ennore


DUAL REDUNDANT SCADA MCS SERVERS

SICTERMINAL

ENGINEERINGTERMINAL

DUAL REDUNDANT SCC-OPERATOR

WORKSTATIONAPPLICATION

SERVER50”TFT

PLASMA DISPLAY PANEL HISTORIAN

SERVER

yp g

MCS SERVERS WORKSTATION 50 TFTScreenDisplay

DUAL REDUNDANT 100 MBPS ETHERNET LAN

FRONT END SERVERROUTER

TO SCCs

LASERJET PRINTER

DOT MATRIXPRINTERDUAL REDUNDANT MCS-

OPERATOR WORKSTATION

TO RCP LOCATIONS

FIELD DEVICES

FLOWCOMPUTER

An

nexu

ree-IV(b

)

Typical Configuration at T-Point Locations


SCC / MCS

OV

yp g

SCC / MCS

VE

R D

AT

A C

HA

NN

EL

COMM

N.

DC TO DCCONVERTER

-48 V nominal

COMM

N.

FIELD DEVICES

CONVERTER-40 V to – 60 V DC

FLOWCOMPUTER

An

nexu

ree-IV(c)

Typical RTU Configurations at RCP/SV Locations

Ennore-Trichy-Madurai LPG Pipelineyp g

SCC / MCS

OVV

ER

DA

TA

CHH

AN

NE

L

COMM

N.

DC TO DC-48 V nominal

FIELD DEVICES

CONVERTER-40 V to – 60 V DC

An

nexu

ree-IV(d

)

S.No. MONTHS--->1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

ACTIVITY

1 Design and Detailed Engineering

2

3

4 Procurement of Materials for

Station Facilities

5

6

7 Cathoic Protection Works

8

9 Progressive Commissioning

LEGEND

PCP WORKS

STATION CONSTRUCTION STATION MATERIALS

NOTE : Overall completion period for the project with progressive commissioning of facilities has been envisaged as 30 months from the date of obtaining relevant statutory clearances.

An

nexu

re-V


Project Completion Schedule

COMMISSIONING

DETAILED ENGINEERING

LAND / ROW & CROP COMPENSA

SCADA WORKS

M/L MATERIALS & COA

MAINLINE CONSTRUCTIO

Construction of Station Facilities

Survey, Land/ RoW Acquisition &Payment of Crop Compensation

Procurement of Pipes and MainlineMaterials

Telecom, Telesupervisory andSCADA works

Mainline Construction

ennore-trichy-madurai lpg pipeline - welcome to...

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