Textiles-to-petrochemical giant Reliance Industries has offered to pick up a substantial equity stake in LNG Petronet, a company floated by a consortium of PSUs, led by Gas Authority of India (GAIL), which is setting up four liquefied natural gas (LNG) terminals in the country.
This comes close on the heels of objections by the petroleum ministry to the proposed investments in Hazira under RILs plan to set up LNG facilities in Gujarat.
Reliance proposes to set up a 10 million tonnes per annum LNG project at Hazira and Jamnagar in Gujarat with an investment of
Rs 9,000 crore, part of which will be funded by foreign entities.
The ministry of petroleum and natural gas has objected to the Hazira part of the project on the ground that it will lead to head-on competition with LNG Petronets proposed 5 mtpa LNG facility at the same location.
The ministry had earlier objected to a proposal by a US multinational to set up an LNG facility at Hazira on the same grounds. However, it has no objection to the facility proposed by Reliance at Jamnagar.
Reliance has written to the government that it is ready to pick up any quantum of equity in LNG Petronet that the PSUs are willing to offer. A substantial equity holding in Petronet will give Reliance control over vast supplies of LNG, an important fuel for power plants. This is important as Reliance is bidding for, and setting up, power plants in various parts of India.
LNG Petronet, in which GAIL, ONGC, Indian Oil and Bharat Petro hold 12.5 per cent each, has already received the go-ahead to set up an LNG facility and pipeline distribution each at Ennore in Tamil Nadu, Mangalore in Karnataka, Cochin in Kerala and Hazira in Gujarat. The remaining equity will be offered to private sector companies and others.
GAIL signed an agreement with Gaz de France on Friday under which the Paris-based company will assist it in import and setting up of terminals for handling gas supplies.
Reliance plans to float a new company for its LNG project, with an equity capital of Rs 4,150 crore, of which 28 per cent will be offered to foreign investors while the Ambanis will retain the rest.
