Petronet LNG ready to plug into power  

Petronet LNG Ltd is keen to diversify into power. The company, which is the largest supplier of liquefied natural gas and has a 6.5-million-tonne (mt) terminal at Dahej in Gujarat, is planning a 1,500 mega watt (MW) power plant.

Prosad Dasgupta, managing director and CEO of Petronet, said the facility would come up at Dahej.

?It will require a Rs 6,000-crore investment,? Dasgupta said.

The company is doing a pre-feasibility study, which will be completed by the end of this month.

The Petronet board is likely to discuss the issue at its next meeting. A detailed project report is expected to be commissioned at the meeting.

?I want to award the engineering procurement contract by June 2008 even though it is slightly ambitious,? he said.

Fertiliser and power companies are the two largest buyers of the gas from Petronet.

Recently it started supplies to Ratnagiri Gas & Power Private Ltd, formerly Dabhol Power Company, in Maharashtra.

The company has contracted about 1.25mt of the gas for Ratnagiri at current market prices. By 2009, the capacity at Dahej will go up to 12.5mt, while the company has firmed up contracts for the supply of 9mt of the gas.

Petronet is scouting for buyers to ensure full capacity utilisation at the plant. Part of the capacity will be used to fire up the power plant.

Dasgupta said a number of synergies were available to the company if the power plant was close to the terminal

Petronet will save on power cost, giving the company a cushion to buy the gas at higher prices.

The market price of the gas has gone up to $8-9 million British thermal unit (mBtu) compared with a price of just $2 per mBtu which it paid for 5mt of the gas a few years ago.

Dasgupta said he did not envisage Petronet paying more than $5-6 mBtu after 2009 when the plant would have a 12.5mt capacity.

?If I can make power cheap, paying little more for the gas won?t hurt because I can still be competitive in the market,? he said.

The power plant will save on central sales tax and value added tax because the gas will be consumed internally instead of being sold.

Moreover, the company will get fiscal concessions for importing power generation equipment.

Source: The Telegraph, Calcutta, 11 September, 2007
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