Dhamra Port in Odisha to save Rs 5000 cr per annum for users

Adani Ports and SEZ’s Dhamra LNG terminal will save over Rs 5,000 crores annually for users.

It will act as a primary source of gas for more than 35 per cent of India’s population and serve more than 8 eastern States by substituting expensive and polluting fuels like Naphtha and HSD.  Dhamra is one of the deep draft ports of India which can accommodate super cape-size vessels.

The project cost of Dhamra LNG Terminal is estimated to be Rs 6,450 crores.  It is fully financed by equity and debt by the shareholders of Dhamra LNG Terminal.

There has been no amount upfront or during the project either as cash or Bank Guarantee has been given by Indian Oil Corporation Limited or GAIL

Dhamra LNG Terminal is owned 50/ 50 by Adani and TotalEnergies. Total equity of Adani and TotalEnergies (of France) shareholders is Rs 1,900 crores. The entire investment has been made without any financial undertaking by IOCL or GAIL. Adani had started committing capital expenditure to the project from 2016 onwards and commercial operations commenced on 21st May 2023.

All risks related to the completion and performance of Dhamra LNG have been solely borne by the Adani-TotalEnergies JV.

The tariff and commercial terms of Dhamra LNG Terminal (inclusive of port charges) was arrived at through competitive benchmarking. Petronet LNG (which is owned by IOCL, GAIL, BPCL and ONGC) operates India’s largest LNG terminal at Dahej and was used as benchmarking the tariff and commercial terms. Dhamra’s tariff is 1.5 per cent lower (Rs 46.49 per tonne or Rs 21 crores annually over 4.5 million tonnes of LNG capacity use) than Dahej LNG terminal charges and has better commercial terms.

In addition to the tariff of Dhamra LNG Terminal being 1.5 per cent lower than Dahej, supply from Dhamra (instead of Dahej) to the nearby markets of IOCL and GAIL (e.g., refineries and fertiliser plants in UP, West Bengal, Bihar) helps these users save at least Rs 800 crores annually on pipeline tariff. Dhamra LNG is located within the limits of Dhamra Port. It is a multi-user, multi-cargo, all weather, deep draft port. As such, the port continuously looks to grow its business and Dhamra LNG development was ably served by the Indian infrastructure capabilities of the Adani Group and the strong international LNG credentials of TotalEnergies.

This grouping saw tremendous value in creating a new LNG market in the eastern part of India via the development of the terminal within Dhamra Port. IOCL and GAIL are owners of gas molecules at all times during the process of using Dhamra LNG Terminal. IOCL and GAIL contract for LNG volumes internationally from global suppliers.  Dhamra LNG will not buy and sell LNG during the operations of the facility. It only provides the service of LNG handling and dispatch. While the offer remained for IOCL and GAIL to take equity in Dhamra, the companies did not take that option as their strategic objective was to supply gas competitively to their consumers in the eastern part of the country.

At the same time, Dhamra was able to offer commercially competitive terms to its users. Hence, their strategic objective was met without injecting equity and they decided to progress on a capacity booking basis only.

The Dhamra Port Company Limited (DPCL) is a 100 per cent subsidiary of Adani Ports and SEZ.

DPCL has been awarded a concession by Government of Odisha to build and operate a port north of the mouth of river Dhamra in Bhadrak district on BOOST (Build, Own, Operate, Share and Transfer) basis for a total period of 34 years including a period of 4 years for construction.

Situated between Haldia and Paradeep, Dhamra Port is in close proximity to the mineral belt of Orissa, Jharkhand and West Bengal offers deepened hinterland connectivity and operational efficiency.