Cost, benefits, concerns: Is the Chennai city gas pipeline project needed?

By N.S. Venkataraman* 

The Union Ministry of Environment, Forest and Climate Change has reportedly granted coastal regulation zone clearance for a natural gas pipeline project in Greater Chennai. The plan involves laying a 466-kilometre pipeline network to distribute natural gas, primarily for domestic and commercial use, starting from Vallur village. The pipeline—made of medium-density polyethylene with a 12 to 18-inch trunk line—will cost around Rs. 5,000 crore, including infrastructure, pipeline laying, and CNG stations.

Originally, the LNG terminal at Ennore—constructed by Indian Oil Corporation at a cost exceeding Rs. 5,000 crore—was intended to supply natural gas to industries, serving as fuel and feedstock for large-scale petrochemical and thermal power projects. The plan was never to use this terminal primarily for household distribution, which can only be a minor and optional application.

This raises a fundamental question: Should imported natural gas, re-gasified at Ennore, replace LPG—already well-distributed and functioning efficiently in Chennai? With LPG sourced both domestically and through imports, the system is well-oiled. Shifting to piped natural gas appears premature and economically questionable, especially considering that over 50% of India's natural gas is imported, priced at $10–$12 per MMBtu—four to six times higher than in gas-rich nations like Qatar. Comparatively, imported LPG costs around $14–$16 per MMBtu, and fluctuates with global energy markets.

Adding to this is the Rs. 5,000 crore investment in the pipeline network itself, along with operational and maintenance expenses, installation of gas meters, and other logistical costs. Given all this, consumers are unlikely to see a tangible price or convenience advantage over LPG.

The existing LPG distribution system is smooth, reliable, and supports significant employment. Displacing this with a new and costly infrastructure raises questions of necessity and efficiency. It also risks job losses in an already burdened economy.

One must also address the current underutilisation of the Ennore LNG terminal. Built with the vision of fuelling industrial expansion, the terminal is now underused because corresponding industrial development hasn’t kept pace. This mismatch suggests poor planning—or planning in a vacuum—where the infrastructure exists but the demand does not. It is a classic case of putting the cart before the horse.

A similar scenario unfolded in Kerala, where the LNG terminal at Kochi was meant to supply gas to Tamil Nadu and Karnataka. But opposition from local communities and lack of political support in Tamil Nadu shelved the inter-state pipeline. Today, the Kochi terminal operates far below economic capacity, serving only limited regions.

Will Ennore suffer the same fate?

Using imported natural gas for household distribution appears to be a weak justification, a desperate attempt to salvage an underutilised LNG terminal. Rather than industrialising at scale to make proper use of this infrastructure, the current plan seems a suboptimal compromise.

Industrial usage of natural gas would yield far higher economic returns than its use in households or small businesses. Switching domestic LPG to natural gas won’t improve the terminal’s return on investment in any meaningful way.

There are also safety risks. Methane, the main component of natural gas, is highly flammable and a potent greenhouse gas. Pipeline leaks—such as the one in Malaysia on April 1, 2025, which caused a major fire—highlight the hazards. In a densely populated city like Chennai, any such incident could be catastrophic, especially given the proposed pipelines would run beneath heavily trafficked urban areas, susceptible to pressure, vibration, and wear.

Chennai’s past infrastructure projects offer cautionary lessons. The stormwater drainage project, which involved major citywide excavation, has underperformed. Some flyovers, like the one near Adyar's LB Road, have proven poorly planned—too narrow for buses and unsafe for pedestrians. Meanwhile, the ongoing Metro Rail construction continues to severely disrupt daily life, with questionable necessity in certain routes.

We cannot afford another massive, disruptive project that may not deliver commensurate benefits.

Chennai has no shortage of seasoned technocrats and planners with global experience. Their voices must be heard. A thorough consultation process is essential—incorporating expert opinion and rigorous cost-benefit analysis. Based on current evidence and precedence, expert consensus may very well be against the project.

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*Trustee, Nandini Voice for the Deprived, Chennai