Essar Oil is planning to revive the Rs 2,500 crore Central India Pipeline project by proposing to underwrite the entire 1,760 km long pipeline.

Senior Essar Oil executives said, “We have proposed to underwrite the construction of the entire pipeline. There are no riders as such. But we would like to have the pipeline tariff of 65 per cent of railway freight charges as against the recent pipeline regulation tariff of 90 per cent”.

Industry sources say the government in its recent pipeline regulation has decided to levy a ceiling of 90 per cent of railway freight rate on products supplied by pipelines.

Petronet Central India had earlier floated a tender on a build-own-operate-transfer basis for constructing the pipeline.

The board of PCI is expected to meet soon and decide on the Essar Oil’s offer as well as the conditional bid submitted by the consortium led by Stroytransgaz.

Essar Oil executives claim the project is “good one” and would feed the high consumption zones in the Central India. The CIP is expected to traverse from Jamnagar to Ratlam via Rajkot and Koyali.

The pipeline will have two off-shoots, a pipeline from Ratlam to Gwalior while the other pipeline will feed the petroleum market in Nagpur.

The pipeline will carry the recently deregulated transportation fuels such as petrol, diesel as well as kerosene and naphtha.

On the conditional bid submitted by the sole bidder, Essar Oil executives claim that, “considering a take-or-pay agreement by the construction or project developer with the oil companies, the pipeline project is viable even if there was any competing pipeline to come up in the near future”.

Reliance group and the engineering conglomerate Larsen & Toubro (L&T) had earlier shown interest in the building the pipeline on BOOT basis when PCIL floated the tender. However, both have not submitted their bids.

While the Indian companies backed out, the Russia firm Stryotransgaz submitted its conditional bid which the board of PCIL has been unwilling to accept it.

Stryotransgaz has experience in constructing oil and gas complexes in Greece, Turkey and Finland besides in CIS countries.