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| Ratnagiri may choose terminal lease bidders by July |
| Bloomberg / Mumbai May 13, 2009, 00:41 IST |
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Ratnagiri Gas & Power Pvt., the operator of India’s biggest gas-fired power plant, may shortlist customers to lease its 1 million tonne-a-year liquefied natural gas import terminal by July, managing director, AK Ahuja said.
The company will choose “one or more than one” of the six initial bids sent by companies, including Reliance Industries Ltd, India’s biggest by value, and state-run Indian Oil Corp., Ahuja said by telephone from New Delhi.
Ratnagiri won’t need to use the entire terminal because it is entitled to get gas from Reliance’s field off the east coast on priority. The surplus capacity can be used by others that aren’t on the government’s list of key gas customers and need to import the fuel to overcome a domestic shortfall.
“The gas supply situation in India is changing rapidly with increasing domestic supply from fields like that of Reliance,” said Amit Rustagi, a Mumbai-based analyst at Antique Stock Broking Ltd. “Ratnagiri’s planned business model cuts risks for the buyer and supplier, especially in a market where supplies and pricing both are uncertain.”
The plant on the west coast is due to start operations by October, Ahuja said yesterday. Ratnagiri, a unit of GAIL India Ltd. and NTPC Ltd., can’t start operating the terminal until after the May-September monsoon season because the port isn’t shielded from turbulent waves.
India will then have three LNG terminals, boosting capacity and helping customers that use more expensive naphtha and imported gas because aging domestic fields can meet around half of demand. Mumbai-based Reliance plans to add 80 million cubic meters a day of gas to the nation’s supplies by the end of the year, increasing oil and gas output by 44 percent in the world’s second fastest-growing major economy.
Ratnagiri may earn around 60 cents per million British thermal units of fuel imported at the terminal or 1.4 billion rupees ($28 million) every year, Ahuja said.
Other companies interested in leasing the surplus capacity include parent NTPC, which is India’s biggest power generator, the GMR Group and Essar Oil Ltd, Ahuja said.
“We have already appointed a consultant and documents for deciding terms of the final bids should be ready shortly,” Ahuja said. “In two months time, we should have shortlisted the companies.” He didn’t give more details.
A plan to double the capacity of the terminal by the end of this year has been delayed. The company wants to eventually increase capacity to 5 million tonnes after a break-water facility is built, Ahuja said.
Ratnagiri spent Rs 500 crore to build the facility and may deploy the unit as a “merchant terminal” for users to bring in LNG and sell the fuel locally, Ahuja said Feb on 12.
The LNG facility, delayed by more than a year, was built to supply fuel to Ratnagiri’s 2,144-Mw power plant, built by Enron Corp. in 1996. The terminal was supposed to start operating at 30 per cent of capacity in May last year, UD Choubey, chairman, GAIL, said in November 2007.
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