Kakinada Seaports Limited and Andhra Pradesh Gas Distribution Corporation Limited have signed a memorandum for setting up of a floating, storage and re-gasification (FSRU)-based liquefied natural gas terminal in Kakinada.

APGDC is a joint venture of Gail Gas Limited and AP Gas Infrastructure Corporation. The memorandum enables them to enter into other commercial agreements.

It is proposed to take up the project in two phases with phase one completion likely by September 2014. The project will be implemented through a special purpose vehicle involving APGDC and its partner GDF Suez LNG UK Limited.

The two phase project will see investment of Rs 1,500 crore and Rs 5,000 crore eventually when the land based unit is set up.

The FRSU will have capacity of 3.5 mmtpa and will go up to 5 mmtpa when the land terminal is set up. It will be able to support about 2500 mw of power generation.

The FSRU terminal will reduce overheads associated with importing LNG from west coast through swapping mechanism. About $ 3-4 per mmbtu can be saved through this project, according to B.C. Tripathi, CMD of GAIL Limited.

AP Chief Minister N Kiran Kumar Reddy said the Government expects the project to deliver gas at affordable prices. Andhra Pradesh is likely to get about Rs 1,000 crore per annum towards VAT from the project and assuming the gas is used by gas-starved power plants in the State.

Tripathi said that GAIL has recently entered into a deal for purchase of 8 mmtpa of LNG at Henry Hub linked prices. This will be available for supply in 2017 and Indian consumers can gain from its supply.

The FSRU terminal in Kakinada will be first on the east Coast and another one is coming up at Gangavaram in partnership with Petronet.

>rishikumar.vundi@thehindu.co.in

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