Visakhapatnam: The Rs 4,500-crore worth Liquefied Natural Gas (LNG) terminal proposed at Vizag’s Gangavaram port is heading nowhere with both state government and the project proponent Petronet LNG Ltd (PLL) holding their cards close to their chest. A top official of the AP government hinted at not being in favour of commitment sought by the PLL.
With the LNG terminal, state government is assured of at least Rs 2,000 crore per annum in the form of various taxes like VAT. Significantly, Gangavaram LNG terminal was one of the subjects discussed and approved by the TD government’s new Cabinet in its first meeting as soon as the government was sworn in 2014.
All the statutory appro-vals for the terminal were in place two years ago. While Petronet is seeking the assurance of buying 1MMTPA of gas for 10 years, the state government was not forthcoming on the commitment.
On the other hand, state government’s AP Gas Distri-bution Corporation had proposed an LNG terminal at Kakinada in collaboration with private firms GDF Suez and Shell. LNG is seen as low-cost fuel with zero emission to meet the energy requirement of power, steel, aluminum, fertilizer and other industries.
Many industries in and around Vishakhapatnam consume coal and other liquid fuels like Naptha, diesel, furnace oil, etc. to meet their fuel requirements. “How can we give the commitment to them on buying the LNG for the next 10 years? As per the industry projections, it’s up to them to decide on setting up the terminal. No doubt there is the lot of demand for LNG and it is also expected to go up in the state with the kind of investments that are lined up. Moreover, APGDC is also developing an LNG terminal on its own and at this juncture, we can’t give any commitment to PLL,” state energy and infrastructure principal secretary Ajay Jain told this correspondent.
PLL sought state government’s help in three areas like connectivity of three gas pipelines that pass through the state with the proposed LNG terminal, commitment from the power sector to buy at least 1MMTPA of gas for 10 years, exemption of levy of VAT on import of capital goods for the project as well as on gas sales to end consumers for a period of five years.
Petronet LNG Ltd also considered the option of chartering a Floating LNG Storage and Regasifi-cation Unit (FSRU). The company had plans to complete this project by 2014, for FSRU, followed by a land-based LNG Terminal by 2016.
The proposed LNG Terminal is to be designed, developed, financed, constructed, managed, operated and maintained by the joint venture company, which will have equity contributions from Petronet LNG Ltd (76pc), Gangavaram Port Ltd (8pc) and other parties such as prospective LNG suppliers/ buyers or any strategic investor. Petronet LNG Ltd will be the majority shareholder and will have complete management control over the JV....