Petronet Plans to Diversify Power Generation Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--India's state controlled pipeline and gas importing company, Petronet (Bombay) is diversifying into power generation projects to further capitalize on its LNG capacity, which cannot continue to be handled by holding in storage tanks. The company's LNG terminal at Dahej in Gujurat will be the source of a gas feed to a 1,100-megawatt power station for which the capital investment will be contained to a figure of $760 million as the project will take advantage of synergies with the LNG terminal. A 60-hectare site for the power station has already been identified.

Petronet LNG (PLL), which is backed by the state gas utility, GAIL India, Bharat Petroleum, and the Oil and Natural Gas Corporation (ONGC), is expanding the LNG capacity at the Dahej terminal to 12.5 million tons per annum (TPA) from the current 7.5 million TPA. PLL supplies 1.5 million TPA of LNG from the Dahej terminal to Ratnagari Gas & Power.

The company is also in the final stages of selecting an engineering, procurement and construction contractor for a 2.5 million-TPA LNG terminal at Kochi in Kerala. Using the model of the Dahej gas and power project, PLL will then consider setting up a second power station using Kochi gas as a feed.

An investment plan for the Dahej project will be presented to the PLL board in April 2008, and the expansion will see 5 million TPA in capacity added by December 2008. PLL might consider a 25% rights issue and a foreign currency convertible bond (FCCB) in the investment plan. Overall financing will be a mix of debt and equity.

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