MbPT will float a request for qualification (RFQ) to invite energy companies to build the terminal...
Mumbai Port Trust (MbPT) is planning to develop an LNG terminal worth R4,000 crore on the outskirts of the city to complement its liquid cargo handling business and earn additional revenue. MbPT will float a request for qualification (RFQ) to invite energy companies to build the terminal, which will come up on the Karanja spoil ground near Uran, around 50 km from Mumbai.
One of the options under consideration, as part of the central government’s draft plan to develop the 1,800 acres with the MbPT in Mumbai into a commercial and entertainment hub, is for the port to curtail its loss-making bulk cargo handling operations. The proposed LNG terminal, along with the liquid cargo that MbPT handles currently, will help offset some of the revenue loss it will suffer if it trims the bulk cargo handling business.
MbPT’s contribution to the project will be around R700 crore and the land it provides for the LNG terminal, while the remaining portion of the project cost will be funded by the company with which MbPT decides to join hands, Ravi Parmar, chairman of MbPT, told FE. “The planned LNG terminal with floating storage and re-gasification unit will be able to handle 5 million tonne (mt) of LNG every year,” Parmar said. The plan is to connect the terminal to the national pipeline grid so that the natural gas can be transported all the way up to Panipat in Haryana, he added.
Some companies that may show interest in partnering with MbPT include Reliance Industries (RIL), Gail (India) and Swan Energy, Parmar said. The RFQ will be on the company’s website for 45 days, after which bidders will be shortlisted and asked to submit financial bids.
Emails sent to RIL and Gail seeking comment remained unanswered till press time. “We hope to complete the process of awarding the project by March 2015, after which it is estimated to take two years for construction,” Parmar said. “Demand for LNG is huge and there are at least 20 firms in this business in India. We expect to see a good response to our project,” he said.
Natural gas production in India has been severely impacted in the last few years with output at RIL’s D6 gas reservoir in the Krishna Godavari basin (touted to be India’s largest gas find till date) steadily declining. The situation has led to several gas-based power plants remaining idle due to shortage of fuel.
Many manufacturing companies are resorting to import of costlier LNG to meet the shortfall in domestic supply, making LNG terminals an attractive proposition for energy firms.
Around 41 million standard cubic metres per day of imported natural gas was consumed in India in 2013-14, according to the petroleum ministry’s annual report.
At present, there are four LNG terminals that have been commissioned in India — at Dahej and Hazira in Gujarat, Kochi in Kerala, and Dabhol in Maharashtra — with a total capacity of 22 million tonne per annum (mtpa). The ministry’s 2013-14 annual report states that the capacity of these four existing terminals is likely to be increased further to 32.5 mtpa by 2016-17.