RNRL in race to hire LNG terminal near Dabhol plant

Anil Ambani Group firm Reliance Natural Resources Ltd (RNRL) has joined the race to hire the LNG terminal adjacent to the Dabhol power plant to import liquefied natural gas (LNG) cargoes.

RNRL joins the likes of Reliance Industries, Essar Oil and Indian Oil for hiring the five-million-tonne-a-year capacity LNG import facility on the basis of toll.

"There are eight companies (who put in expression of interest)... RNRL is one of them," said A K Ahuja, MD, Ratnagiri Gas and Power Pvt Ltd, the company that operates the nation's biggest gas-fired power plant and the adjacent LNG import facility. Others in the fray include state power utility NTPC and GMR.

Ahuja said RGPPL will frame bidding criteria and call for financial bids by next month. RGPPL does not need the import facility as the government has already allocated natural gas from RIL's Bay of Bengal KG-D6 fields to fire the 2,150 Mw power plant.

The LNG terminal is mechanically complete, but commercial commissioning has been put off till September. The Ratnagiri port has no breakwater, which makes docking vessels impossible during monsoon.

"Also, RGPPL has not executed a port operation agreement with Shipping Corp of India (SCI) or any other authorised vessel operator. The terminal can be commissioned only when we have such an agreement," another official said. "Since there is no breakwater, only one million tonne capacity will be available for leasing in 2009-10," the official added. RGPPL would earn Rs 140 crore annually as toll fee, which is likely to be around $0.60 per million British thermal unit of imported fuel.

"Our operation cost is around Rs 120 crore, so we will make Rs 20 crore of profit on import of one million tonne of LNG. When import goes up, our profits will also rise as the operation cost will remain around the same," he said.

He said the commissioning of the LNG receipt and regassification terminal has been delayed to September/October as the rough sea makes it difficult for ships to dock at the port during the monsoon.

RGPPL currently receives regasified LNG under a 5.8 mmscmd supply agreement with Petronet. However, the company takes only 2.8 mmscmd due to persistent equipment problems at the power plant. The deal with Petronet is set to expire in September, after which it will start receiving gas from KG-D6.

Dabhol would be India's third LNG terminal after Petronet LNG Ltd's Dahej facility in Gujarat and Royal Dutch Shell Plc's Hazira plant, also in the same state. The commissioning of the terminal was initially planned for April and then delayed to early May. RGPPL gives the port service operation contract to SCI on a nomination basis, he said.

The official said RGPPL would execute an agreement to this effect before commissioning the LNG terminal.

RGPPL was set up as a joint venture led by state-run gas utility GAIL and power producer NTPC to operate the 2,150-Mw gas-fired power plant at Dabhol, about 185 km south of Mumbai. The power plant was originally owned by Dabhol Power Co, led by the now defunct US company Enron.

RGPPL, which took over the project in July 2005, is yet to finish building a breakwater. He said the breakwater would be ready in three years.

In a full year, the terminal is expected to operate at only partial capacity, of about 2 million tonne a year, until construction on a 2.3-km protective breakwater is completed, which would enable it to receive LNG vessels round the year.