The Japanese company, a leading LNG carrier, will hold 70 per cent equity in the venture, Enron will have 20 per cent stake and SCI will hold the rest, according to Enron India country manager Sanjay Bhatnagar.

Enron will invest in the shipping consortium through its affiliate Atlantic Commercial and the project will have a debt-equity ratio of 75:25. The consortium will own and operate a 135,000 cubic metre dedicated LNG tanker which will be built by the Mitsubishi Heavy Industries shipyard.

Ship construction is expected to start in the first quarter of 1999 and first LNG deliveries are likely to be in the last quarter of 2001. The agreement would have a time charter of dedicated 20 years for the supply of LNG tothe Dabhol power plant which would commence commercial production in the last quarter of 2001.

Bhatnagar said that SCI being the largest shipping company in the country, would provide necessary assistance in handling the liner at ports.

Dabhol Power Company (DPC) would be the first independent power project to import LNG into India. The company will source 1.7 million tonnes of LNG from Oman and is holding talks with Abu Dhabi for procuring 0.4 million tonnes of LNG.

SCI chairman PK Srivastava said that the ship, to be named `LNG LAXMI', may make at least 15 voyages a year to ferry LNG for the project.

Bhatnagar said DPC Phase-II will achieve financial closure by the end of January next year. In the third phase of the project, Enron is planning to lay pipelines to carry LNG in Maharashtra, Karnataka and Gujarat, he added.

Today's annoucement is being viewed as a last-minute attempt to save its LNG transportation venture. Earlier, the company's proposal to the Directorate General of Shipping seekingpermission to allow Mitsui OSK to transport LNG had run into trouble.

The Indian National Shipowners' Association (INSA) representing over 30 shipowners had opposed DPC's move and demanded reservation of the LNG transportation for domestic shipping companies.

The DGS's permission, which is renewable every year, is required for chartering foreign vessels. Since LNG transportaion involves contracts of around 20 years, the DGS has referred the matter to the government for ministerial approval.

The approval is crucial for DPC as its financial closure depends on it. Apprehensive that other multinationals would subsequently follow DPC's example of hiring a foreign shipping company for LNG transportation, INSA has requested reserving the trade for Indian companies.

Alternatively, the association has also requested that the joint venture of DPC with Mitsui OSK should be substituted with a joint venture with an Indian company or a consortium of Indian companies, thus satisfying the basic requirements of equitysubscription as well providing indigenous operational expertise.

According to INSA, the LNG trade is unique as it involves equity participation of several entities, which also includes the importer. They also feel that the participation of Indian companies would save considerable foreign exchange. INSA had, in fact, asked for an urgent meeting with DPC to discuss the issue.