Govt nixes GAIL's Kerala LNG plan

The government has spiked GAIL (India) Ltd's plan to construct a five million tonne LNG import terminal at Kayamkulam, saying Petronet LNG's Kochi terminal will be the only facility for importing LNG by public sector firms in Kerala.

GAIL, an equal promoter of Petronet LNG that has begun work on building the 2.5 million tonne LNG import terminal at Kochi, wanted to team up with National Thermal Power Corporation (NTPC) for setting up an LNG plant for supply of feedstock to the power company's Kayamkulam plant.

"We have told GAIL that it will not set up any (LNG) terminal other than Kochi in Kerala," petroleum secretary S C Tripathi said.

He said Petronet LNG has already started work on setting up an LNG regasification terminal at Kochi. "GAIL being one of the promoters of PLL, it is not advisable to set up a terminal at a distance of only 150 km from there, making Kochi as well as other terminal unviable."

GAIL-NTPC, he said, can source their own LNG and regasify it at the Petronet Terminal.

"They can transport gas to NTPC power plant through a pipeline."

GAIL was the sole bidder for supply of natural gas/LNG for NTPC's Kayamkulam plant expansion.

"If need be, the capacity of the Kochi plant can be enhanced," Tripathi said.

The ministry of petroleum and natural gas has also directed GAIL to stay out from setting up operations and maintenance of NTPC's proposed power project at Kayamkulam as it falls out of its core area.

The plan for joint ownership and hiring of LNG ships by GAIL and NPTC has also been put on hold till sourcing of gas and liquefication arrangements are put in place.

GAIL-NTPC had planned a Rs 2,300 crore LNG import and regasification terminal and a petrochemical plant in Kerala.

The two had wanted to source LNG from west Asian or south east Asian countries and envisaged completing the project in 48 months.