GAIL to give advance to PLL for 2.5 mt capacity at Dahej

Petronet LNG, which is expanding its Dahej terminal from 10 to 15 million tonnes, has booked half of the planned capacity addition with GAIL in return for an interest free advance to be invested in the project. The advance will take care of the 30 per cent equity Petronet needs in the Rs 3,000 crore expansion. Another 1 million tonne has been booked with GSPC.

The country’s biggest liquefied natural gas importer has got into this unique arrangement that will help in enhancing the viability of the expanded project by negligible interest outgo. “We have signed an agreement with GAIL for giving them a capacity of 2.5 million tonne out of the 5 million tonne expansion planned at Dahej. This has been done on use or pay. We have booked our volumes and GAIL will have to use or pay. So, we have an assured regassifcation income on half of the expanded capacity from GAIL. This was signed last month”, A K Balyan, CEO and managing director of the company told Business Standard.

Balyan said that in return for the 2.5 million tonne capacity offer, GAIL will give the company an interest free advance for the expansion plan at Dahej. This advance will be enough to take care of our equity portion of 30 per cent in the Dahej expansion project at estimated cost of Rs 3,000 crore. GAIL, which owns 12.5 percents stake in Petronet, has been rapidly tying new LNG supplies to meet vast expanding energy needs of the country. Earlier this month, it signed an agreement with Russia’s Gazprom to buy 2.5 million tonne LNG annually for 20 years beginning FY19.

In December 2011, GAIL had signed an agreement to buy 3.5 million tonnes of LNG a year for 20 years from Houston-based Cheniere Energy Partners LP's Sabine Pass terminal in western Cameron Parish, Louisiana. This year in August, it signed an agreement with GDF Suez to buy 12 cargoes of LNG or about 0.8 million tonnes of the fuel from 2013 to 2014.

Petronet has also booked another over 1 million tonne of the expanded capacity at Dahej with GSPC, a Gujarat government company. “GSPC has also signed the agreement with a use or pay clause,” Balyan said. Petronet plans to market gas from the remaining 1 plus million tonne capacity on its own.