Govt to hive off Dabhol LNG import terminal

The government is hiving off the 5 million tonne LNG (liquefied natural gas) import terminal of the Dabhol power project as part of plans to check cost over-runs of switching on the generators.

SBI Caps has prepared a report on the proposed sale and Petronet LNG, a company promoted by state-owned oil companies, is emerging as the favoured entity for taking over the terminal, followed by gas utility GAIL. The Dabhol complex is now with Ratnagiri Gas and Power, a special purpose vehicle floated by GAIL and state-owned generation utility.

While taking over the complex from institutional lenders, the SPV had estimated an outgo of Rs 710 crore for completing 15% work on the LNG terminal left incomplete by the original promoter, now defunct US major Enron. It now appears that this work will need an additional Rs 1,000 crore. Together with transfer cost of Rs 1,790 crore, the total cost of the LNG part of Dabhol alone will cost Rs 3,500 crore.

At this cost, a new 7.5 million tonnes per annum LNG terminal can be built. The cost over-run on contracts for the 15% unfinished work for the LNG terminal has been estimated at Rs 225 crore. Most of this is on account of constructing a breakwater so that ships carrying LNG can berth safely even in choppy seas during monsoons. Since the lenders have already disbursed funds, the delay in starting work has pushed up the interest cost during construction period to Rs 200 crore from Rs 64 crore originally estimated.

Petronet emerged as the favoured choice for handing over the LNG terminal at a meeting chaired by cabinet secretary BK Chaturvedi on Monday.
Petronet, if it finally takes over, will confine itself in starting and operating the terminal and contract gas supplies for the power plant. Originally, the LNG terminal was to be completed in 2007 but the schedule has now been extended to 2009.

Source: The Times of India, New Delhi, August 25, 2006
                          Petronet LNG Stock Quotes                                       
©Petronet LNG Limited                                                            Home | Contact Us | Disclaimer | Quick Links | Mail Servers: Primary / Secondary |