GSPC LNG Ltd, a unit of Gujarat government-owned GSPC, on July 24 won approval to become a co-developer of the multi-product special economic zone (SEZ) being developed by Adani Ports at Mundra, a move that will help trim cost by Rs 700-800 crore, an official said.
Commerce Ministry's Board of Approvals (BoA) gave nod to GSPC LNG's proposal to 5 million tons a year LNG terminal together with storage and re-gasification facilities over an area of 28 hectares.
"By becoming co-developer, the project will now be entitled to duty-free imports which will help cut costs down by Rs 700-800 crore from the previous estimate of Rs 5,200 crore," he said, adding that the terminal will be ready by 2016 end.
Once they avail duty free imports, the developers are required to sell a threshold of the produce to units within a SEZ.
The GSPC-Adani combine plan to see 3.8 million tons per annum of LNG to units in nearby Dahej SEZ and the one coming up in Mangalore.
They are in discussions with state-owned Oil and Natural Gas Corp (ONGC) to sell 1.1 million tons of LNG to its petrochemical unit coming up in Dahej SEZ and another 1.3 million tons to ONGC's petrochem plant coming up in Mangalore SEZ. They want to sell another 1.4 million tons to Torrent Energy Ltd's power plant in Dahej SEZ.
The official said the LNG import terminal had previously got environment clearance and will now proceed to finalise a joint venture partner.
India Gas Solutions Pvt Ltd - the equal joint venture between the Mukesh Ambani-led RIL and Europe's second largest oil firm BP, ONGC and Indian Oil Corp (IOC) have been shortlisted to pick up 25 per cent stake in the project.
Initially 8 firms including state gas utility GAIL India had expressed interest to buy the stake but only three were finalised.
"Essentially, GSPC is looking at a partner which can bring in LNG or can consume the imported liquid gas," he said.
While BP is a producer and trader of LNG, RIL's twin refineries at Jamnagar in Gujarat as well as its large petrochemical plants are huge consumers of gas. ONGC also is a big consumer of the fuel.
Besides the three, other firms which had expressed interest included Petronet LNG Ltd, Torrent Energy, Japan's Mitsui & Co and Toyota Tsusho, the official said.
GSPC would hold 50 per cent stake in the project while Adani Group would take 25 per cent. The project is to be financed in a debt to equity ratio of 70:30.
The terminal capacity would be expandable upto 10 million tonnes per annum.