Date:17/03/2004 URL: http://www.thehindubusinessline.com/2004/03/17/stories/2004031701290300.htm

Back Petronet's Kochi LNG terminal hangs fire

G.K. Nair

Kochi , March 16

THE chances of Petronet LNG Ltd's (PLL) terminal coming up in Kochi appear to be diminishing following the company's decision to set up a new terminal at Mangalore.

PLL sources told Business Line that the tender prequalification for the five-million-tonne Mangalore terminal project had been completed and there were four companies in the final bid.

Unlike in Kerala there would be an assured market in Karnataka for the LNG and compared to Kochi the terminal construction cost in Mangalore would be lower, they pointed out.

LNG could be carried to Kerala through pipeline, which would be laid by GAIL (India) Ltd. ONGC, MRPL, Bidadi Power plant and several other industries there could easily absorb LNG from the terminal, they claimed.

PLL had asked the Kerala Government to give an assurance that it would help the company market 70 per cent of the gas from the proposed 2.5-million tonne terminal in the State.

According to the sources, the company had now made it clear that it would not be going ahead with the project if it did not get assured buyers.

The Kochi project was conceived about four years ago with the expectation that a Malaysian power company, Siasin Ltd, which had come forward to set up a thermal plant adjacent to the proposed site of the terminal, would become the anchor customer.

This company had backed out leaving PLL to rely on NTPC, which, is understood to be in the process of finding a supplier who could deliver LNG at the lowest price at its doorsteps.

As uncertainty hovers over the NTPC's buying LNG from the Kochi terminal for its Kayamkulam plant, capacity of which is to be expanded from 360 MW to 2300 MW in the next Plan, and the strict conditions put forward by the corporation, the Kerala Government is going to conduct a market study on the possibility of selling LNG in Tamil Nadu and Karnataka, Mr P.H. Kurien, Managing Director, Kerala State Industrial Development Corporation (KSIDC), told Business Line. "Once the study is completed the State Government would approach the Centre with the report."

He said that a terminal in Kochi was inevitable for the industrial development of the State. Several existing industries such as the Fertilisers and Chemicals, Travancore (FACT) would be benefited by it, he said. Besides, "once LNG comes a lot of fuel-based industries would also come up," he said. Already 40 hectares of land has allotted for the project and PLL had invested over Rs 30 crore in pre-project activities. Besides, it had received all the required clearances from the relevant authorities.