Dabhol to get cheaper LNG from April 1  

RATNAGIRI Gas and Power (RGPPL) will start generating power from April using LNG. Petronet LNG (PLL) has arrived at an informal arrangement with suppliers to buy 1.2 million tonnes of LNG over two years. The gas will be sold to RGPPL at subsidised rates. However, no details are available yet on the extent of discount to be given to the project.

PLL managing director Prosad Dasgupta said, ?We are on track to supply LNG to the project. However, this is subject to completion of the Dahej-Uran and Uran-Dabhol pipelines by Gail India. LNG would be supplied to RGPPL at a discounted price compared to the sourcing cost.?

The petroleum ministry is working out a formula by means of which RGPPL will get subsidised LNG at the cost of other gas users. The ministry is likely announce this formula by mid-January. According to a petroleum ministry source, ?We are working out price averaging method to lower the LNG cost for RGPPL?. He refused to divulge any details.

Petroleum minister Murli Deora declined to comment. LNG for RGPPL will be sourced by PLL from Qatar, Algeria, Oman, Iran and Egypt. RGPPL is currently generating electricity at Rs 5.25 per unit using naphtha as feedstock. It is buying naphtha from IndianOil at about $500 per tonne, a considerable premium over prevailing Brent prices.

When asked about pricing of LNG, Mr Gupta said, ?We have never sourced LNG beyond $8 per mmbtu from the spot market. Prices of LNG are softening in the international market and we expect to get better prices for RGPCL.? PLL has been appointed as a nodal agency for sourcing LNG for RGPPL after GAIL failed to source LNG at agreed prices. RGPPL is has written to the power ministry seeking customs duty exemption on LNG imports.

Meanwhile, PLL is negotiating with Shell to use the latter?s Hazira terminal to import 1.25 million tonnes of LNG for gassification, from where it can be pumped into Gail?s pipeline network.

Source: The Economic Times, Mumbai
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