The Hindu Business Line : Petronet in talks with 3 bidders for Kochi LNG terminal

In the plan
Bidders are a consortium of IHI, Japan, and one each from France and Italy.
Land in Puthuvypen Island will be given to contractor soon after awarding the contract.
Terminal expected to be ready for commissioning after mid- 2010.
PLL already in pact with Ras Gas, Qatar for 2.5 mt of LNG by 2009.

G.K. Nair

Kochi, Aug. 31 The engineering, procurement and construction (EPC) contract for Petronet LNG (PLL)’s 2.5 million tonne per annum LNG terminal, involving an investment of around Rs 3,000 crore, would be awarded on September 30 as negotiations with the three short-listed bidders are on and they are expected to be over before the deadline.

The bidders are a consortium of IHI, Japan, one from France and the other from Italy.

The price bid from the Japanese consortium has the least number of deviations, Mr P. Dasgupta, Chairman and Managing Director, PLL, told Business Line on Friday. The winner, after the negotiations, would be awarded the contract on S eptember 30, he said.

The land in the Puthuvypen Island will have to be handed over to the contractor immediately after awarding the contract.

This would, however, depend on the final word from the Cochin Port Trust (CPT) on the concession agreement covering several charges and execution of a lease agreement, he said.

Currently the file is with the Union Ministry of Shipping, awaiting clearance, he added.

Tariff decision

Since it is going to be the first terminal to be hosted by a major port in the country, the Ministry has to come out with the tariffs to be charged towards pilotage, wharfage and other support services.

The annual revenue from these sources for CPT would be substantial, he said.

At Dahej, it comes to around Rs 50 crore a year.

The deadline set for completing these formalities by the Ministry/CPT is also September 30, he said. “We (PLL and the CPT) have agreed to every clause in the draft agreements,” he said.

After handing over the land to the contractor it would take 42 months to complete the terminal.

“If we could hand over the land on October 1, the terminal would be ready for commissioning any time after mid- 2010,” Mr Dasgupta said.

As far as the procurement of gas is concerned, he said, “there won’t be any problem at all”.

All the commercial negotiations with the Australian consortium Gorgan have been completed.

Next meeting with them to discuss the SPA and other remaining issues is scheduled for September 6, he said.

Anyway, supply by Gorgan would start only by 2012, and, hence, “my commencement date is ahead by 12 to 18 months”, he said.

Pacts for gas

PLL has already entered into agreements with Ras Gas, Qatar for supply of 2.5 million tonnes of LNG by 2009. The total supply contract at present is for 6.5 mt per annum.

All the contracts are with the flexibility to supply the gas at any of the PLL terminals in the country.

Therefore, till the commencement of supply by the Australian consortium, the Kochi terminal would have gas from the other sources, Mr Dasgupta said.

Consumer demand

The estimated consumer demand for gas from Kochi for the initial 3 to 4 years would be 2.5-3.5 mt without including the requirement of National Thermal Power Corporation (NTPC) for expanding its Kayamkulam thermal plant to 1,950 MW from the present 350 MW.

There hasn’t been any negotiation or agreement reached with NTPC by PLL, he said.

The NTPC is understood to have entered into an MoU with Nigeria for a tie-up with the African oil producer to construct and operate a power plant there on condition that the latter would supply gas for the expansion of its Kayamkulam plant.

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