Business & Economy

Indian Oil, GAIL to take equity stake in Dhamra LNG terminal

NetIndian News Network

New Delhi, September 22, 2016

The public sector refining giant Indian Oil Corporation Limited and gas major GAIL (India) Limited  yesterday signed a memorandum of understanding (MoU) with Dhamra LNG Terminal Private Limited (DLTPL) for taking equity in the 5 MMTPA capacity LNG Receiving, Storage and Regasification Terminal, being put up at Dhamra Port, Odisha. 
The agreement was signed in New Delhi in the presence of Minister of State for Petroleum and Natural Gas Dharmendra Pradhan.
An official press release said that, as per the MoU, DLTPL shall be an equal joint venture of Indian Oil and GAIL, on the one hand, and the Adani Group on the other. 
Indian Oil and GAIL would acquire 39% and 11% equity, respectively, in DLTPL, with the balance 50% being held by Adani group.  Going forward, Indian Oil and Adani group will each divest 1% of their respective stake to a credible financial institution which will then have 2% stake in the terminal. 
Apart from equity, Indian Oil and GAIL intend to book regasification capacity of 3.0 and 1.5 MMTPA, respectively, in the terminal.
The release said the development comes in the backdrop of Government’s focus on undertaking welfare and growth measures in eastern India so as to bring this hitherto underdeveloped region into the economic mainstream of the country.
Prime Minister Narendra Modi has maintained that India cannot develop till the eastern part of India progresses, it pointed out.
Presently, the states in eastern India, such as Odisha, Bihar, Jharkhand and West Bengal, are not able to get the benefits of natural gas in sectors like domestic, transport, industries, and so on as the region does not have gas infrastructure by way of LNG Terminals and cross-country gas pipeline grid. 
The LNG Terminal at Dhamra would provide the potential customers in these states a clean and economically viable alternative which will also help in reducing the carbon footprint. This will also provide momentum to the economic growth of the region by attracting new industrial projects the release said.
The LNG Terminal would also meet the gas requirements of three oil refineries of Indian Oil situated in Barauni, Haldia and Paradip. The three fertilizers plants at Barauni, Sindri and Gorakhpur which are being revived by Government of India will also benefit from the terminal. The natural gas from the terminal would also be supplied to various City Gas Distribution networks coming up in eastern India, which in turn would cater to the requirements of piped gas for households, CNG for automobiles and clean fuel requirements of commercial establishments and industries.
"It is, therefore, expected that once operational, Dhamra LNG terminal will emerge as a bridge to prosperity for the entire eastern India," the release said.
Meanwhile, in another development yesterday, the Cabinet Committee on Economic Affairs (CCEA) approved capital grant of 40%, amounting to Rs. 5,176 crore over five years, for  the Jagdishpur-Haldia and Bokaro-Dhamra Pipeline (JHBDPL) project, which is being implemented by GAIL at a total capital outlay of Rs.  12,940 crore. 
This is the first time that the Government of India has extended capital grant to a natural gas pipeline project.
The 2,539 km long JHBDPL is expected to be completed by December 2020 and will connect Uttar Pradesh, Bihar, Jharkhand, West Bengal and Odisha. The project will also see City Gas Distribution (CGD) networks being set up by GAIL in seven important towns in eastern India -- Varanasi, Patna, Ranchi, Jamshedpur, Kolkata, Bhubaneshwar and Cuttack.
The JHBDPL gas pipeline will be used for gas supply to three fertilizer plants in eastern India -- Barauni, Sindri and Gorakhpur.
The release said the Dhamra LNG Terminal project and JHBDPL project, cumulatively, are expected to bring investments to the tune of Rs. 51,000 crore into the economy of eastern India. Of this, about Rs. 13,000 crore will be spent on JHBDPL pipeline infrastructure; Rs. 6,000 crore on CGD projects in seven cities; Rs. 6,000 crore on Dhamra LNG Terminal and Rs. 26,000 crore on revival of Gorakhpur, Barauni, Sindri and Talcher fertilizer units.