Petronet's Gangavaram Port LNG Terminal in Limbo

Petronet’s proposed LNG terminal at Gangavaram Port in the state of Andhra Pradesh appears to be in limbo as it awaits commitment from the state government on three critical areas.  

Speaking in the Indian Parliament late last week Indian oil minister Dharmendra Pradhan said Petronet has requested the state government for its support in three critical areas including connectivity of the LNG terminal to the three gas pipelines through the state, Time of India, a local English newspaper reported Saturday.

Petronet has also asked the state government support is commitment from the power sector to buy at least 1 MMTPA equivalent of gas for a minimum period of 10 years and state government agencies, who are the current and potential consumers of gas, to buy their gas requirement from the Gangavaram LNG terminal, the minister said.

Finally, the company is looking for exemption from levy of VAT on import of capital goods for the project as well as on gas sales for a period of five years has also been requested, the minister stated.

He said some of the LNG terminals on the east coast including Kakinada and Dhamra are making progress and they will take away a part of the potential demand which was proposed to be met by the Gangavaram terminal.

"However, to ensure commercial viability of such a capital intensive project, it is important to have a sound commercial structure in place," the minister said.