The Hindu Business Line : Kochi LNG terminal: Petronet set to sign contract with Japanese firm

Kochi, Dec. 21 The Petronet LNG Ltd (PLL) is to sign the EPC (engineering, procurement and construction) contract for Kochi LNG terminal with the Japanese firm IHI immediately after the PLL Board meeting scheduled for January 16, with agreements on all issues, including rates, said to have been concluded with the construction company.

“Talks on all issues, including rates, have been concluded with the contractors and we are ready to sign the EPC with the Japanese firm after the Board meeting,” Mr P. Dasgupta, Managing Director, PLL, told Business Line.

The Letter of Intent (LI) would also be issued after January 16, he said.

Pending issue

The only pending issue now is signing of lease agreement with the Cochin Port Trust, which he hoped could be signed before the PLL Board meeting.

He said that awarding the EPC contract cannot be delayed indefinitely as such delays would have negative impact on the quoted rates.

Already, the delay in setting up of the terminal, which was proposed to be established along with its Dahej terminal in Gujarat in 1999-2000, has pushed up the cost by 30-40 per cent now from that of the Dahej first phase.

First phase of Dahej terminal was completed at Rs1,950 crore ($500 million) while the cost of the Kochi terminal would be higher at around Rs2,800 crore ($700 million) at the current rates.

It will take 39 months to complete the terminal and it is expected to become operational by mid-2011.

The agreement with the CPT would cover port access and wharfage charges. The former would form an actual income for the port maintenance while the latter becomes important as the CPT does not have any pre-decided wharfage charge for LNG. But the charges such as pilotage and other vessel related operations could be levied at the rates fixed by the Tariff Authority for Major Ports (TAMP) for the port.

In connection with the supply of gas from Australia, he said that next round of discussions with the Australian consortium, Gorgan Projects, will be held in February 2008. However, the start-up from this source would commence only by 2012.

Gas supply during the gap between the commissioning of the terminal by mid-2011 and the start-up from Australia might be arranged from Qatar or Algeria. As far as purchase of gas is concerned, there are plenty of options at present, he added.

MPs’ appeal

Meanwhile, Members of Parliament from Kerala had sought the intervention of the Union Minister for Petroleum and Natural Gas to speed up the implementation of the terminal, Mr Chandran Pillai, MP, told Business Line.

In a memorandum to the Union Minister, the MPs said that way back in 1998 the proposal for the terminal was considered to ease the problem of the prevailing high cost of feedstock and energy inputs, which severely hampered further industrialisation of the State. But, its implementation has been inordinately delayed, he said.

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