>  Mr. L Mansingh,
    Chairman,
    Petroleum and Natural Gas Regulatory Board,
    Government of India

>  Mr. R S Pandey, IAS.,
    Secretary,
    Ministry of Petroleum & Natural Gas,
    Government of India

>  Mr. Busi Sam Bob, IAS.,
     Principal Secretary, Industries & Commerce Dept.

>  Mr. Atul Chandra,
    President – International Operations (E&P),
    Reliance Industries Limited

>  Mr. Y Harish Chandra Prasad,
     Chairman, CII – Andhra Pradesh

>  Mr. Shakti Sagar,
     Vice Chairman – CII Andhra Pradesh

>  Mr. S.Kannan,
    Director & Head, CII Andhra Pradesh

>  My colleague and incharge of Major Industries, Mr. Kanna Laxminarayana

>  Captains from the Industry

>  Colleagues from the Government

>  Friends from the Media

>  Ladies and Gentlemen

I would like to speak to you with a categorical assurance from the side of the Government of Andhra Pradesh the pro and industrial-friendly atmosphere in the State of A.P. will remain unaffected.  There are few problems that have surfaced very recently.  I am sure all these problems will be sorted out by Government of India at the earliest opportunity.  Opportunities in A.P. are plenty for investment.  Government of A.P. is fully committed to go for industrialization of the State in a very big way.

It is my privilege to be present here and inaugurate this conference on Natural Gas, organized by CII in association with the Government of Andhra Pradesh.  I congratulate CII for having organized this conference.

Natural Gas discoveries all over the world have given phenomenal boost to the economy. It has emerged as the most preferred fuel due to its inherent environmentally benign nature, greater efficiency and cost effectiveness and is being termed as the Fuel of the 21st Century.

The natural gas in KG basin is capable of substituting Naphtha for the production of Urea;  power generation;  petrol and diesel for domestic and transport and  furnace oil for industrial use. 

Out of the total production of around 87 MMSCMD at present, after internal consumption, around 74 MMSCMD is available for sale to various consumers.  90% of the gas in the country till the year 2008 was being produced in onshore and offshore of the Western gas fields.

With the recent discovery of KG Basin, here in Andhra Pradesh, which is one of the largest Gas discoveries in India in the Eastern Region and also the discovery of crude oil in Barmer Field of Cairns Energy on Western Region, India has demonstrated that it is rich in hydrocarbon reserves.

Considering the high priority of Government of India to enhance energy security of country and making petroleum products available to common man at affordable prices, the Government has adopted multi-pronged strategy.

Stable crude oil prices are the first requirement for sustained economic development for our country. During the last 15 months, the prices of crude oil in the International Market have been on a roller coaster ride creating uncertainty. This volatility created problems for the import dependent economies.  The maximum burden of this price increase was borne by the Government by issuing bonds worth Rs.71,292 Crores and rest was met by Upstream Oil Companies. 

I must bring to your notice that the Government of India envisages the increase in LPG population coverage from 50% to almost 75% by 2015. The purpose is to reach LPG in villages, so that dependence on conventional fuels like wood, coal etc. is reduced. This will not only help in conservation of forests but will also have positive impact on environment as well as on the health of our rural womenfolk.

With large investment plans announced by private players, it is critical that we in the Government continue our efforts for market development in the sector. I must point out three key areas in this regard.

Firstly, Expansion of infrastructure: The Government is working towards fulfillment of infrastructure requirements by continued focus on expansion of gas-transmission pipelines.

Towards this endeavour, Government of Andhra Pradesh through APIIC, is investing in the equity upto a maximum of 5% of share in Bhagyanagar Gas Ltd. The Bhagyanagar Gas Ltd. (BGL) has already taken up the City Gas Distribution in 3 major cities of Hyderabad, Vijayawada and Kakinada. 

BGL proposed to provide 2.66 lakh domestic connections and 50 CNG stations for public transport purpose in next five years in Hyderabad City.

A total 645 Kms pipeline infrastructure in the  Vijayawada town and around 2.25 lakh domestic connections will be provided in the next 5 years and approximately 1,000 connections will be provided by July, 2010 and first online CNG  based depot will be commissioned in April 2010.

It is also proposed to commission first CNG Station in Kakinada in January 2010 and domestic gas flow is expected to be commissioned by June 2010.

Investment Corporation of Andhra Pradesh (INCAP) has been appointed as the Nodal Agency for development of City Gas Distribution (CGD) in other towns of the State duly taking into account of gas pipeline alignment.

In order to take maximum advantage of the Natural Gas potential in the KG basin, Government of Andhra Pradesh is involved in the Exploitation and Production in the KG Basin through ‘A.P. Gas Infrastructure Corporation Limited (APGIC)’ with the participation of the APIIC and APGENCO.  

APGIC, as a consortium member with ONGC, British Gas (BG India), NTPC, Oil India has participated in NELP – VIII round bidding for all 5 – blocks (1- Deep Water Block , 4- Shallow Water Blocks ) in KG basin  and won  4- blocks (1- Deep Water Block , 3- Shallow Water Blocks).

Secondly, Facilitating funding requirements: Our Regulatory policies and incentives ensure ease of investment and actualization of announced plans across the value chain – from Exploitation and Production to distribution and utilization.

Thirdly, the Government of India is also working towards ensuring gas for gas-deprived sectors at reasonable prices, specifically, to the Power and Fertilizers sectors.

Our former Chief Minister, Late Dr.Y.S Rajasekhara Reddy has already requested Government of India for revival of Urea and Ammonia plant of  Fertilizer Corporation of India Limited at Ramagundam keeping in view of availability of natural gas in the KG basin.  I, on my behalf, also appeal to Government of India to revive the plant at the earliest duly allocating the required natural gas.

Similarly, Indian Farmers Fertiliser Cooperative Limited (IFFCO), the world’s largest Fertilizer Cooperative has proposed to set up a grassroot Ammonia-Urea plant of 7.26 lakh tonnes capacity at Nellore during 1992 and could not be implemented due to non-availability of natural gas.  

I appeal to Government of India to revive Ramagundam fertiliser plant and also to ensure IFFCO set up 26 lakh MTPA Ammonia-Urea plant at Nellore duly allocating the natural gas.

I once again emphasize that Government of Andhra Pradesh is taking all steps to take maximum advantage of the natural gas potential in the KG basin by way of participating in Exploitation and Production and promote local industries including power plants, fertilizer plants and City Gas Distribution.

I wish this conference a great success and I am sure the deliberations will be of a great use both for the Government and all other stake holders.

Thank you.