IOC, GAIL to sign pact to take 49% stake in Adani project

IOC will take 38 per cent stake and GAIL will pick 11 per cent in the proposed 5-million tonne a year LNG import terminal at Dhamra by FY19

State-owned refiner Indian Oil Corporation (IOC) and GAIL India will sign a pact on Wednesday to take 49 per cent stake in Adani Group's Rs 5,000-crore Dhamra LNG project in Odisha.

While IOC will take 38 per cent, GAIL will pick 11 per cent stake in the proposed 5-million tonne a year liquefied natural gas (LNG) import terminal at Dhamra by financial year 2018-19.

Adani Petroleum Terminal will hold 49 per cent in Dhamra LNG Terminal  — the firm setting up the LNG plant. The remaining 2 per cent interest will be held by financial institutions.

Sources said a formal agreement signing ceremony is planned on Wednesday where Oil Minister Dharmendra Pradhan, who also hails from Odisha, will also be present.

IOC had last year signed up to use 60 per cent of the terminal capacity for importing gas for its refineries at Haldia in West Bengal and Paradip in Odisha.

GAIL too had signed up for 1.5 million tonnes of the terminal's regassification capacity.

GAIL and IOC were initially bargaining for 50 per cent stake in the project, but Adani wanted to retain controlling interest.

Equity in the Adani terminal follows GAIL dropping plans in March last year to set up a floating LNG import terminal at Paradip. IOC too had in 2012 signed an memorandum of understanding (MoU) with Dhamra LNG Port Corp (DPCL) to develop an LNG terminal at the port.

After shelving their respective plans, the firms in May last year signed a pact with Dhamra LNG Terminal, a firm owned by Adani Enterprises.

Dhamra will be the sixth LNG project announced on the east coast. While GAIL has dropped plans of a 4-mt project at Paradip, Petronet LNG, a firm in which GAIL and IOC are promoters, has shelved plans to set up a 5-mt a year LNG import facility at Gangavaram in Andhra Pradesh.

GAIL, along with GdF and Shell, has proposed a 3.5-mt floating LNG terminal at Kakinada while IOC is building a 5-mt facility at Ennore in Tamil Nadu.

Real estate player Hiranandani Group is looking to set up a Rs 2,400-crore, 4-mt floating LNG import terminal off Haldia in West Bengal.

With GAIL, which owns and operates bulk of the nation's cross-country pipelines, and IOC, whose refineries are a big user of gas, joining Dhamra, the fate of LNG terminals in Andhra Pradesh is uncertain. Dhamra can meet all of the demand in Odisha and Andhra Pradesh.

Dhamra port in Bhadrak district of Odisha is an all- weather deep water port, sources said.

GAIL in October 2013 had signed an MoU with the Paradip Port Trust for setting up of the LNG import terminal. While the port was to invest Rs 650 crore in breakwater and dredging, GAIL was to invest Rs 2,458 crore for the 4-mt terminal which can be expanded to 10 mt. The plan was, however, dropped in March last year.