Shell to get 26% equity in Kakinada LNG project

Cabinet decides to raise coal stocks 50 per cent to 209,000 tonne, to procure 2,000-Mw power

The Andhra Pradesh government has decided to induct global oil major Shell with a 26 per cent equity in the proposed special purpose vehicle (SPV) for setting up a floating, storage and re-gasification unit (FSRU) for liquefied natural gas at Kakinada.

Briefing mediapersons following a Cabinet meeting on Thursday, information and public relations minister, P Raghunatha Reddy, said it had also been decided to source 2,000-Mw power, augment the available coal stocks and set up a solar park in Anantapur district.

The SPV for the Rs 3,600-crore LNG terminal was formed last year between AP Gas Distribution Corporation (APGDC) Limited and GDF Suez LNG UK Limited. It would be able to provide fuel for generation of 2,500-Mw power.

An MoU for the project was signed in May last year between Kakinada Seaports Limited and APGDC, a joint venture of GAIL Gas Limited and AP Gas Infrastructure Corporation for the project.The memorandum enables them to enter into other commercial agreements.

After taking the opinion of solicitor general of India and recommendations of the committee of secretaries constituted for the project purpose, the Cabinet approved the proposal to induct Shell, a department of infrastructure and investment release said.

The FSRU would make available imported gas to power, fertiliser, industrial and automobile sectors and also to city gas distribution in the state. Reddy said it would reduce overheads associated with importing LNG from the west coast through swapping mechanism. About $3-4 per mmbtu could be saved through this project.

“The government will get Rs 1,700-crore per annum revenue in the form of equity value, taxes and duties in addition to revenue share in port charges. The project will provide direct and indirect employment to 2,000 people,” he said.

The FSRU will have capacity of 3.5-mmtpa (million metric tonne per annum) and will go up to 5-mmtpa when the land terminal is set up.

 

"The project would reinforce the government's commitment to develop the state's entire coastline as a logistics hub of the country," said Parakala Prabhakar, adviser to AP government (communications).

 

Starting October 2, Reddy said the state government would work to assure 24-hour supply to industrial and household consumers, besides uninterrupted supply to the farm sector. To meet the power demand the state would procure an additional 2,000-Mw from multiple sources.

 

To improve the raw material availability for the power sector, it would augment coal storage to 209,000 tonne in the coming months from 144,000 tonnes now.

 

With respect to the agricultural sector, farmers in Anantapur and West Godavari under Phase-I implementation would receive a 70-100% subsidy for employing drip and splinter-led farm irrigation.

 

According to the minister, the state government would set up an oil seeds research centre in Anantapur this year. It would also set up solar power parks in Guntur and Kadiri in Anantapur district.