The Hindu Business Line : Petronet no to LNG terminal unless market is assured

THOUGH GAIL (India) Ltd and the prospective buyers in Kerala argue that customers would come after the setting up of the proposed LNG terminal here, Petronet LNG Ltd (PLL) seems to be sticking to its stand for an assured market as it does not want to "burn its fingers."

At the meeting held here last week to review the progress on the 2.5 million tonne LNG terminal project here proposed by PLL, the participants, including GAIL, put the blame on PLL for not setting up the terminal despite adequate market.

According to sources close to PLL, the company had set up the Dahej terminal in Gujarat without a tie-up of the market and hence burned its fingers "pretty badly."

Given this experience, the Ministry of Petroleum and Natural Gas has decided not to undertake this "risky reverse process again," they told Business Line. "It was a decision taken by the PLL Board of Directors and the Ministry that unless such projects are financed on limited recourse finance basis and unless financial closure is achieved, which requires a market tie-up beforehand, the project will not take off."

The base price from Dahej is $3.5 (Rs 157.50) per million metric British thermal units (mmbtu) and for Cochin it would come to $3.8 when additional shipping cost is added. Based on this, GAIL could work out the final price, which from Cochin might come to $4.5 per mmbtu, energy experts here pointed out.

PLL is understood to have not held any discussions with RasGas for supply of LNG to Cochin. The company, the sources said, had short-listed prospective EPC contractors and could finalise the date of supply and rate with RasGas any time.

Now it has to issue the letter requesting techno-commercial bids and simultaneously float tender for project management consultant and shipping line charter. All these would go simultaneously, if there were an assured market, they claimed.

On the reports of PLL and ONGC planning to set up a 1,000 MW power plant at Dahej, industry sources here said that the company could think of setting up the power plant here adjacent to the proposed terminal site at Puthuvypeen.

In that case, it would not have to postpone the work for want of consumers. PLL and ONGC could invest in the plant and in three years' time the terminal and the power plant would be ready and power trading only needed to be tied-up, they said.

However, the experts here felt that the shortage of market for the LNG terminal there might have forced the company to think of setting up the power plant there so that it could achieve the full market.

Besides, when it plans to expand the terminal there simultaneously the capacity of the power plant could also be expanded.

Thus, the current stalemate continues and according to the sources, a meeting at the Minister/Secretary level with the Chairman and Managing Directors of PLL and its promoter companies, could only break the deadlock, they said.

More Stories on : Infrastructure | Petroleum | Kerala

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Singapore Airlines adds two day flights on Mumbai route

Reduce fare in Madurai-Chennai route, IA urged

IL&FS ties up funding for road project in Thiruvananthapuram

Petronet no to LNG terminal unless market is assured

New revenue share format for Kochi terminal

Contracts to foreign majors — Indian dredgers stress need for proper pricing mechanism

IBS develops passenger service system

Air India insurance premium maintains southward trend