Price of LNG from Kochi terminal high, say industries

The liquefied natural gas (LNG) supplied from the Petronet LNG's Kochi re-gasification terminal has turned unaffordable for the local industries at the current market price, the Kerala Chamber of Commerce and Industry (KCCI) said.

Presently, Petronet is quoting LNG at $23.74 per Million British Thermal Unit (mmbtu), which is unaffordable to the local fertiliser, power and other industries, said KCCI.

The high price could be attributed to capacity utilisation of just 8 per cent for the Rs 4,600 crore terminal. However, it has the in-built capacity to handle 5 million mmbtu annually. The under-utilisation issue has led to frequent increase in the price of supplied gas.

Not happy with the price of LNG, the Fertiliser and Chemicals Travancore (FACT) has decided to opt out from buying LNG. FACT has decided to stop production of ammonia by utilising LNG as fuel, and has opted for importing ammonia.

In September 2013, FACT announced it had spent around Rs 60 crore for the plant conversion. However, it was facing serious financial issues as the price of LNG supplied to them has been increased to $24.35 per mmbtu. Three days ago, it had shut its ammonia plant.

This is an indication on the crisis-ridden path ahead for the Petronet terminal at Puthvype, near here.

Against this, KCCI is taking the lead in the 'Mission LNG' by organising a workshop on January 18 at the KCCI chamber hall to discuss various issues related to the LNG terminal. The meeting would be attended by representatives from Gas Authority of India (GAIL), Petronet LNG, FACT, Travancore Cochin Chemicals (TCC), NTPC, KSRTC, KSEB, CII and various trade union representatives, a KCCI press release said.

The workshop would discuss various issues and would come out with an action plan to achieve a cost-effective green fuel for industries and households in Kerala.

The chamber plans to soon come out with a concrete action plan to achieve the targets of 'Mission LNG'.

KN Marzook, past chairman, and VP Shayd, vice chairman, KCCI, said the government policies with regard to LNG pricing, allocation and distribution of domestically produced gas among the states needed to be revised.

As LNG is an essential commodity for the user industries, a uniform pricing is essential throughout the country for maintaining industry-competitiveness. A national-level pooling and allocation policy is required for an equitable distribution of available gas among different states, they said.

While the local production accounts for 79 per cent of domestic LNG requirement, 21 per cent comes from import. Unlike other petroleum products such as petrol and diesel, there is no uniform pricing pattern for LNG.

As the imported LNG has been the fresh addition coming to the country's energy basket, tax exemption from state and central governments should also be allowed.

Financial support should be extended to industries/organisations like KSEB, KSRTC, FACT and small and medium commercial institutions, for switching over to LNG, the chamber said.