Petronet LNG, Torrent vie for Dahej power unit

Petronet LNG, Torrent vie for Dahej power unit

Ahmedabad: India’s leading liquefied natural gas (LNG) player Petronet LNG Ltd (PLL) and Ahmedabad-based power and pharmaceuticals business house Torrent Group are lobbying hard to be permitted to set up a power station at what promises to be a lucrative industrial zone in coastalGujarat. PLL and Torrent are seeking permission of the state government and its business-enabler undertaking Gujarat Industrial Development Corp. (GIDC) to set up the power project at a so-called special economic zone under Dahej SEZ Ltd—a joint venture between Indian hydrocarbon major Oil and Natural Gas Corp. (ONGC) and GIDC. While PLL plans to set up a gas-based project, the Torrent Group is keen on a coal-fired thermal project.

The ambitions of the two come up against an earlier proposal by ONGC to float a subsidiary to produce 1,400MW power at the SEZ.

ONGC and GIDC are jointly setting up a new chemical and petrochemical SEZ spread over 1,717ha near PLL’s Dahej LNG terminal. The main business proposed at the SEZ is a Rs13,650 crore petrochemical complex.

ONGC has been planning a 1,400MW gas-based power project for the SEZ, but no formal decision has yet been taken, according to company director A.K. Hazaria. The original plan envisaged about 500MW of power being used at the petrochemical complex, coming up under ONGC Petro-additions Ltd, and the remaining 900MW distributed among other units at the SEZ.

PLL, on its part, said it has separately firmed up a plan to set up 1,250MW power project near its Dahej LNG terminal. “Our board has given in-principle approval for the project after we received a detailed feasibility report from (our) consultant (Lahmeyer International GmBH)," saidP. Dasgupta, chief executive of PLL. The project will be run on natural gas, which PLL plans to source in its liquified form from its LNG terminal at Dahej, south Gujarat. At present, PLL operates a 5 million tonnes per annum (mtpa) LNG terminal, which it is expanding to 12.5mtpa in three years.

Such a sourcing plan would have tax benefits, Dasgupta insisted. “As this power project would be set up by PLL, we would be exempt from paying the value-added tax. This would help us reduce the cost of fuel. In turn, we can provide comparatively cheaper power," he said. Dasgupta saw completion of the power project in 33 months.

PLL has approached GIDC, which supports the setting up of industrial projects in the state, for 60ha land near the Dahej LNG terminal. “We need to have land adjacent to our LNG terminal to operate power project at the optimum level. It does not matter whether the land given to us is within or outside the SEZ, but our problem is that except for the LNG terminal, we are surrounded by land that has been notified as SEZs," Dasgupta said. Calls to Nayan Raval, general manager, GIDC, for comment were not returned.

The Gujarat government, meanwhile, has written to Dahej SEZ to allow Torrent Group’s power company Torrent Power Ltd to “co-develop" a coal-fired power project, with exclusive rights to power distribution within the SEZ. While this puts pressure on the state-run GIDC, a proposal to make Torrent a co-developer has not yet been presented to Dahej SEZ board.

According to state government officials and executives at Dahej SEZ, apart from offering to co-develop a 1,500MW coal-based power plant, the Torrent Group also proposes to pick up equity in the SEZ firm. A Torrent spokesperson was not available for comment.

While Torrent and PLL are lobbying hard with the Gujarat government entity, none of them have approached ONGC, yet. “All I can say that we have not received any proposal from either Torrent or PLL in this regard and there is no proposal before our board as yet," ONGC’s Hazarika said.