BackEssar Group, GVK Power keen on using Ratnagiri’s LNG terminal
Essar Group, GVK Power keen on using Ratnagiri’s LNG terminal
PremiumRevenueexpectations: A file photo of Dabhol power station. RGPPL expects to earn Rs150 crore annually as charges for using its LNG terminal. AFP
New Delhi: Cash-strapped Ratnagiri Gas and Power Pvt. Ltd (RGPPL) expects to earn about Rs150 crore a year in user charges from its liquefied natural gas (LNG) terminal, likely to be commissioned in a month-and-a-half.
At least two private sector companies have shown interest in using the LNG terminal to covert into gas the liquid LNG shipped from abroad, a company official said.
The LNG terminal is part of an integrated power project at RGPPL that has an installed capacity of 2,150MW, but is being scaled down to 1,844MW. The project is fuelled by natural gas, which is typically transported by ships in liquid form.
The terminal has a capacity to handle 1.2 million tonnes per annum (mtpa), which is to be raised to 5mtpa. While 2.1mtpa will be required for the power project, the rest can be used for merchant sales.
GVK group chairman G.V. Krishna Reddy confirmed his group’s interest in using the terminal. “We plan to supply gas to the Andhra Pradesh government for its power projects," he said.
An Essar spokesperson, said in an email response, “As an ongoing process, we explore various commercial matters with concerned parties, and it is not our practice to comment unless we reach certain conclusions."
“Once the terminal is commissioned, we expect it to earn revenues for the project during the pre-monsoon months of April, May and June," said a power ministry official, on condition of anonymity.
RGPPL, earlier known as Dabhol Power Co., was conceived in the 1990s and was originally promoted by Enron Corp. The cost to build the project was estimated to be Rs10,038 crore at the time of asset transfer to the government in mid-2005. It has since escalated by Rs2,594 crore to Rs12,897 crore.
The terminal has caught the private sector’s attention because firms need to ensure LNG supplies for gas-fired power projects. India has only two functioning LNG re-gasification terminals, both located in Gujarat.
This is not the first time that Essar has shown interest in the terminal. It had approached state-owned gas utility GAIL (India) Ltd (GAIL) seeking a partnership to acquire the terminal, when there was a proposal to call bids for it, as reported by Mint on 30 October.
The proposal, one of several options, was forwarded to an empowered group of ministers on the Dabhol project by a group of senior bureaucrats, but was dropped after stiff opposition from state-run electricity utility NTPC Ltd and GAIL, who are majority shareholders with a 28.33% stake each. The balance is held by the Maharashtra State Electricity Board and several banks.
“This is a good strategy as it will provide stable cash flow for RGPPL. India being a gas-starved country, there will always be a demand for gas," said Prayesh Jain, an analyst at financial services firm India Infoline Ltd.
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