India Issues Guidelines for FSRU Projects
India’s shipping ministry has issued guidelines for setting up of floating storage regasification units (FSRU) based LNG import terminals at major ports, Businessline reported March 11 citing a ministry circular.
According to the ministry, land license model will be followed under a single stage e-tendering for implementing FSRU projects with private funds wherein the bid reserve price will be the water area charges set as per the land policy prevailing at a particular port. The entity quoting the highest premium above the reserve price to be paid to the port will win the contract, typically for 30 years.
The total licence rental for the licence period is to be paid upfront, Businessline reported citing the circular.
The FSRU project will not be bound by any minimum guaranteed throughput (MGT) till five years after commercial operations date. Thereafter, 30% of the project capacity will be prescribed as MGT. The licence agreement could be terminated for defaulting on MGT for three consecutive years. However, the licensee may be given an option to continue with the project by paying wharf age for the shortfall in MGT, the ministry said.
The FSRU operator will also be allowed to handle own LNG – it can buy LNG, handle it and sell at market determined rates. For transporting LNG through barges, vessel related charges pertaining to barges has to be paid to the port trust.
The operator has to submit bank guarantee equal to 10% of the project cost (subject to a maximum of rupees 5bn) as performance security to ensure timely commissioning of the project. The performance security shall be forfeited by the FSRU operator if the project is not completed within two years or extended period – not exceeding six months- as approved by the port.
India's LNG imports are expected to rise in coming years as new terminals come online. According to Wood Mackenzie, India's regas capacity will reach 56.5mn mt/yr by 2025 from the existing 25.5mn mt/yr. India's ability to import significant volumes of LNG could be enhanced further if proposed regas terminals proceed, WoodMac said in a note published last week.
The south Asian nation has five operational land-based terminals, four on the west coast and one on the east cost, which was recently inaugurated.