External factors to delay commissioning of Kochi LNG terminal

G.K. Nair Kochi | Updated on March 12, 2018 Published on July 14, 2012

Petronet LNG Ltd’s (PLL) Rs 4,200-crore 5 million tonnes a year LNG terminal currently under construction in the Puthyvype island off Kochi is expected to be ready by October.

However, the commissioning is likely to be delayed due to non-completion of the pipeline laying work to carry the gas to the consumers in Kerala, Tamil Nadu and Karnataka.

Dr A.K. Balyan, Managing Director and Chief Executive Officer, PLL, told Business Line that “the 2.5-million tonnes a year terminal will be ready by August as scheduled earlier. But, for raising the capacity of the terminal to 5 million tonnes a year for which construction works are under way and it should be ready by October”.

Even though PLL would be ready by Oct, commissioning of the terminal is likely to be postponed because of delay in completing the work on the 45-km first phase of the pipeline by GAIL for supplying gas to Bharat Petroleum Company Ltd (BPCL) refinery, FACT and two-three small consumers. “We understand that this pipeline is expected to be ready by December,” he said.

Dr Balyan said the phase-II pipeline via Coimbatore, Tirupur, Salem to Bangalore is also entangled with problems relating to land acquisition and others with contractors.

A similar kind of predicament has cropped up with the third pipeline to Bangalore via northern Kerala and Mangalore, he said. Thus, the off take in the first phase is going to be less, and hence, the terminal would have to be run on lower capacity and that in turn would turn out to be uneconomical, he added.

On the other hand, work has not started in so far as laying GAIL pipeline to the NTPC Kayamkulam Thermal Power plant. A final agreement is yet to be reached between the GAIL and the NTPC, it is understood.

Given this scenario, commissioning of the LNG terminal at its full capacity of 5 mt a year would materialise only by end of next year, Dr Balyan said.

Kerala’s role

On the Kerala Government-PLL joint venture power project, Dr Balyan said, “we are happy to work with them in the project integrated with the LNG terminal”. When compared with other fuels, LNG is one of the cheapest. We have agreed to set it up as a joint venture with the State having an equal say in the 1,200-MW project.

“Our two main conditions are that first a guaranteed purchase (off take) of 75 per cent of the power generated by the plant and secondly, the state government should provide 50 acres,” he said.

Land is available adjacent to the LNG terminal, and hence, it is not going to be a problem. Dr Balyan said the power generated by the plant would cost below Rs 7 a unit. The total cost of the project may come to somewhere between Rs 3,500 and Rs 4,000 crore. And it would take about 36 months to complete the power plant, he said.

“We have committed to sign an MoU with the State Government and it is now for the State Government to decide”, he added.

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Published on July 14, 2012
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