Financial Daily from THE HINDU group of publications
Friday, Sep 23, 2005
HPCL plans LNG terminal at Mundra Eyeing stake in Hazira import terminal
Mumbai , Sept. 22
HINDUSTAN Petroleum Corporation Ltd (HPCL) is looking at setting up a green field LNG terminal in Mundra, Gujarat, as part of it plan to enter the business of gas distribution.
Talking to the mediapersons here on Wednesday after the company's fifty-third annual general meeting, Mr M.B. Lal, Chairman and Managing Director of HPCL, said a feasibility report on the project was expected in three months.
The proposed project would be five million tonnes a year to begin with. However, it was too premature to talk of aspects like project cost before the feasibility report was submitted, he said.
The LNG terminal, if it comes through, would be executed by HPCL alone, Mr Lal said.
This is one of two LNG projects that HPCL is currently working on. The company is also in talks with Shell Gas B.V. to acquire a stake in the merchant LNG import terminal at Hazira where the French company, Total Gaz, is the other stakeholder with 26 per cent.
The terminal that was set up at a cost of Rs 3,000 crore, offers short-term contracts to its customers unlike the normal practice of giving long-term contracts with watertight clauses.
"The due diligence is over and we will be bidding for a stake in the Hazira LNG terminal. We are looking at a percentage that will give us a say in the running of the company," Mr Lal said.
HPCL has an `in principle agreement' with Shell to buy equity in the terminal and if plans go through, the Indian PSU would acquire about 26 per cent. There is some delay in clinching the deal as discussions are on regarding changing over from the present format of merchant terminal, Mr Lal said.
"The Hazira terminal cannot continue with the present loss-making formula. The Mundra project would be parallel to Hazira," he said.
A Shell spokesperson confirmed that HPCL had carried out the due diligence. "We are currently in talks with several prospective partners," he said.
The company had a debt-equity ratio of 0.02 and could borrow up to Rs 5,000 from the market to meet its capital expenditure needs. There could be another Rs 1,100 crore from its oil bonds to be tapped, said Mr C. Ramulu, Director, Finance.
HPCL's planned capital expenditure for 2002-07 is Rs 11,000 crore. HPCL shares closed today at Rs 303.45 at NSE, down Rs 9.65 from previous close of Rs 313.10.
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