Dabhol LNG terminal to be delayed, again

Operations at India’s third liquefied natural gas (LNG) terminal, being built at Dabhol in Maharashtra, will be further delayed with difficulties in dredging silt at the Ratnagiri port pushing back its commissioning schedule. The terminal was expected to be commissioned last month.

“The commissioning of the LNG terminal has been delayed. Dredging will take more time,” said a senior official from Ratnagiri Gas and Power Private Ltd (RGPPL). He refused to provide a new timeline. RGPPL has awarded the contract for dredging to Gammon India.

RGPPL had planned to commission the terminal in March last year. Like the first two terminals at Dahej and Hazira in Gujarat, the Dabhol plant will be located on the west coast.

The terminal, with an LNG regasification capacity of 5 million tonnes per annum (mtpa), forms a part of the integrated Dabhol power project owned by RGPPL. The terminal will, however, become fully operational only after the completion of the breakwater facilities in 2011. A breakwater facility is a structure erected in the sea to protect a ship from the waves.

The Rs 3,000-crore terminal alone accounts for a fourth of the overall cost of the Dabhol project and was initially meant to feed the adjoining power plant. Now RGPPL has drawn up plans to offer gas on a tolling basis, rather than using it to run the power plant.

The terminal is expected to generate revenue of at least Rs 150 crore annually for the company at the current market price for LNG regasification, even while processing a million tonne — a fifth of its total capacity — of LNG initially.

According to RGPPL’s estimates, the terminal’s capacity utilisation could be ramped up to a half depending upon the shipping efficiency. Currently, the market price for LNG regasification is benchmarked between 60 and 70 cents per million British thermal units (mbtu).

The company had earlier invited expressions of interest to decide upon a suitable price to provide the regasification facility. More than eight companies have shown interest, including NTPC, GAIL, Indian Oil Corporation, Reliance Industries Ltd and Reliance Natural Resources Ltd.

The delays expected in commissioning and operationalising the terminal have now forced the company to postpone the schedule for floating requests for proposal (RFPs). “We plan to link the RFPs with the completion of dredging work,” the official said. The selected company could bring in its cargo and use the regasification facility.