Sources say Adani-Gujarat PSUs Mundra LNG unit may start ops Jan-end

Sources say Adani-Gujarat PSUs Mundra LNG unit may start ops Jan-end

AHMEDABAD – The five mtpa liquefied natural gas terminal at Mundra in Gujarat, which has been lying idle for a year over some differences between project partners, may finally become operational by the end of January, sources with direct knowledge of the matter said.

The terminal belongs to GSPC LNG Ltd, a joint venture of some Gujarat government undertakings led by Gujarat State Petroleum Corp Ltd, and the Adani group. The terminal was completed last year but could not become operational due to certain disagreements between the partners.

“The GSPC LNG board has decided to operationalise the terminal by third or fourth week of January and we are now working towards commissioning the LNG terminal on Jan 20. We should be issuing a tender to source the commissioning LNG cargo before Christmas,” one of the sources said.

Initially, the terminal is expected to operate at 1.5-2.0 mtpa capacity and will be ramped up to full capacity over a year, another source said.

In August, Cogencis reported that the partners had arrived at an interim agreement to operationalise the LNG terminal. Even as the partners have agreed to start the project, they will continue to work on ironing out differences and may take legal recourse as well.

Currently, Gujarat government-owned Gujarat State Petroleum Corp Ltd, state port regulator Gujarat Maritime Board, and a few other state government-owned companies hold 75% stake in the project. Adani group holds the remaining 25% stake.

Following the announcement of a partnership between French major Total SA and Adani Group, which will see the former acquiring 37.4% stake in Adani Gas Ltd and joint investments in liquefied natural gas infrastructure, Total reportedly may pick up some of Adani Group’s stake in the Mundra LNG terminal.

The Adani group wanted GSPC and other partners to share port development costs, including dredging costs of around 12 bln rupees. The Gujarat government undertakings, however, have concerns over the costing of these works by the Adani group.

The Adani group also wanted clarity on issues like payment of annual fees to Gujarat Maritime Board. Further, it was demanding a payment of 650 mln rupees a year as lease rental from the joint venture company as the project is located at Adani group-controlled Mundra port.

GSPC, on its part, insisted that long-term sub-concession agreement for use of the waterfront be transferred to the joint venture company, instead of it being with the Adani group.

Due to the differences, Adani group is learnt to have even turned away one LNG cargo which had arrived at Mundra last year for commissioning the terminal. Even oil major Indian Oil Corp Ltd, which had taken board approval to pick up 25% stake in the project later back-tracked because of trouble between partners.

The operationalisation of Mundra LNG terminal could help ease problem of LNG handling and storage capacity in the western part of the country. Though Petronet LNG Ltd has 17.5-mtpa terminal at Dahej and Royal Dutch Shell group has a 5.2-mtpa unit at Hazira, importers could do well with more capacity in the region, given the slump in global LNG prices.

Shares of Adani Enterprises Ltd today ended 2% higher at 210.40 rupees on the National Stock Exchange.  End

https://www.cogencis.com/newssection/sources-say-adani-gujarat-psus-mundra-lng-unit-may-start-ops-jan-end/

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