AP Chief Minister N Chandrababu Naidu says project commercially viable, crucial for gas starved power projects
With the Andhra Pradesh Government keen on setting up an lNG terminal in Gangavaram (located near Visakhapatnam), the Petroleum Ministry has raised questions about the commercial viability of the project as already another lNG terminal in Kakinada is coming up in the State. The Centre’s main concern is that whether having two lNG terminals in a single State will be feasible enough in terms of seeking adequate number of customers for gas.
Andhra Pradesh Chief Minister N Chandrababu Naidu in a recent meeting with Petroleum Minister Dharmendra Pradhan is learnt to have assured the Centre that the Gangavaram project can co-exist with the already under implementation Kakinada lNG terminal as the commercial potential of sale of gas in the State is going to increase in the near future.
According to sources, Naidu told Pradhan that with Andhra Pradesh now bifurcated after Telagana was carved out of it, there is all the more requirement for gas in State. Also with several gas-based power plants of big-wigs like GVK, GMR and lanco situated in the State having been gravely impacted due to poor gas supply from the KG basin, the Chief Minister is said to have strongly advocated for the presence of another lNG terminal in Gangavaram, they added.
The Petroleum Ministry on its part is learnt to have raised the issue of whether there would be enough demand for imported gas in the coming days and also whether two lNG terminals situated not very far away from each other (both are situated along the eastern coast off the Bay of Bengal) can co-exist simultaneously catering to similar kind of customers. The Gangavaram lNG terminal, which is to come up on the east coast near Visakhapatnam, will be set up by Petronet lNG ltd. The State Government’s Cabinet had in July this year, cleared the proposal for setting up the Gangavaram terminal along with the one at Kakinada.
Sources further informed that Petronet has already sought the necessary environmental clearances for setting up the lNG terminal at Gangavaram. In December 2013, the Gangavaram lNG terminal project was granted the environmental clearance as well as the Coastal Regulatory Zone (CRZ) clearance by the Environment Ministry. Gangavaram Port ltd along with Petronet will construct and operate a 5 mmtpa lNG terminal with a provision to expand further to 10 mmtpa.
The joint venture company will have equity contributions from Petronet (76 per cent) Gangavaram Port ltd (8 per cent) and other parties such as prospective lNG suppliers or buyers or any strategic investor. Petronet will be the majority share holder and will have complete management control over the joint venture company.As per the agreement between Petronet and Gangavaram Port, the lNG terminal is likely to be operational by the end of 2016. It is being set up at a cost of Rs 4,500 crore.
The Gangavaram lNG terminal is expected to contribute immensely to the economic development of the region by providing additional and lower cost alternate fuel to various sectors such as refinery, power, fertiliser and transport which in-turn would result in the substantial downstream investments in these sectors. The Kakinada lNG terminal on the other hand is a joint venture between State-owned GAIl, Andhra Pradesh Gas Infrastructure Corporation, GDF Suez and Shell. The land for it has already been acquired.