New Delhi, Oct 11 (IANS): The Union government has agreed to partly fund the Rs 12,940-crore natural gas pipeline project of state-run Gas Authority of India Ltd (Gail) from Uttar Pradesh's Jagdishpur in Uttar Pradesh to West Bengal's Haldia.

In a regulatory filing to the National Stock Exchange on Monday, Gail said the viability gap funding would be Rs 5,176 crore or 40 per cent of the cost for the 2,539-km Jagdishpur-Haldia and Bokaro (Jharkhand)-Dhamra (Odisha) gas pipeline project.

The pipeline will carry gas from western offshore fields and fuel imported in Gujarat and Maharashtra up to Jagdishpur.

The ambitious project, when completed by 2020, will provide natural gas to the industrial, commercial, domestic and transport sectors across Uttar Pradesh, Bihar, Jharkhand, Odisha and West Bengal.

The capital grant will encourage supply of eco-friendly fuel at affordable tariffs to industries and boost industrial development in the five states.

The Cabinet Committee on Economic Affairs, under the chairmanship of Prime Minister Narendra Modi, on September 21 approved the capital support for the project, connecting eastern part of the country with the national gas grid.

"The filing also said that the project will be implemented in synchronisation with the execution of three anchor lead fertiliser plants at Gorakhpur (UP), Barauni (Bihar) and Sindri (Jharkhand), which will enter into an agreement with Gail for the gas supply.

The project also envisages the development of city gas distribution networks in Varanasi, Patna, Ranchi, Kolkata, Jamshedpur, Bhubaneswar and Cuttack, which are along the pipeline project.

Gail will develop the distribution networks with the state governments to supply clean cooking fuel to households and clean fuel to the transport sector in the eastern region.

The networks will benefit 10.3 million people living in the seven cities and generate jobs to about 21,000 people, besides boosting the region's socio-economic development.