State, Petronet to sign concession agreement

Petronet LNG Ltd. (PLL) said that it will sign the 'concession agreement' with the state government next month. The agreement was to be signed within 18 months of the issue of Letter of Intent (LoI), which has since been expired. The non-execution of the agreement would have prevented the company from importing LNG through Dahej Port.

The Gujarat Maritime Board (GMB) had awarded the LoI to PLL on 29 August, 1998. As per the LoI, the company was to build, own, operate and transfer (BOOT) the LNG Port Terminal at Dahej.

"The entire agreement has been frozen and it requires the approval of the board. In fact we were to sign it on 19 February but due to some administrative problems we could not sign it. However the state government has been very supportive and there are no problems", A. Sengupta, vice president (finance) of PLL said on Wednesday.

"We have provided the bank guarantee of Rs 1 crore to the GMB. Although there is no express extension of the LoI, GMB has sought extension of the bank guarantee from time to time in terms of the LoI which has been duly extended by the company", Sengupta said.

On July last, the GMB had also written a letter saying that they had no objection over PLL carrying out the construction of LNG import facilities.

PLL had to sign the agreement within 18 months of the issue of LoI. However, the draft of the agreement has been finalised between the GMB and the company and is waiting for the approval of the Gujarat Infrastructure Development Board.

The land being used for developing the LNG Port and the regasification facilities are owned by the GMB. The lease agreement, which was proposed to be executed simultaneously with the Concession Agreement, is yet to be signed.

About the March 1 IPO, Sengupta said that the company has opted for the 100 per cent book building method for efficient price discovery. The proceeds from the IPO would be utilised for the expansion of Dahej LNG Port Terminal and regasisifaction terminal.

The Dahej terminal has already been connected to the HBJ pipeline of GAIL and the pipeline of Gujarat State Petroleum Corpn Ltd.