Government asks for LNG terminal on East Coast

HYDERABAD: Chief minister N Kiran Kumar Reddy has urged Union petroleum and natural gas minister S Jaipal Reddy to instruct the Gas Authority of India Limited (GAIL) and Petronet LNG to initiate necessary measures to set up an LNG terminal on the east coast off Andhra Pradesh to meet the natural gas shortage in the state.In a letter addressed to Jaipal Reddy on Thursday, he referred to loss of power generation to the extent of around 600 MW due to non-availability of natural gas to the nine gas-based power projects which have a total installed capacity of 2,770 MW or 60 million units per day.“The only mechanism to supply LNG (liquefied natural gas) to willing customers in Andhra Pradesh is by swapping RIL’s KG D-6 gas with RLNG being procured on the west coast.Under the swapping arrangement, there will be virtual flow of RLNG from the west coast to consumers in the AP region, while the physical supply to these consumers will be from the KG D-6 gas.“In this barter arrangement consumers are required to pay marketing margin, applicable transportation charges for RLNG and applicable intra-state and inter-state taxes for sourcing the RLNG.As a huge burden falling on the end-consumers, the consumers are unable to procure RLNG on long-term basis in spite of its requirement.“To avoid the aforesaid complexities involved in the swapping arrangement and also to utilise the RLNG on long-term basis, there is an urgent need to set up an LNG terminal on the east coast of the state to enable the state grow economically and industrially, and also for meeting the gas requirement for sectors such as power, fertilizer and refineries.“As against the requirement of 12.97 MMSCMD, the nine gas-based power projects in Andhra Pradesh are receiving natural gas of only 9.75 MMSCMD from the RIL KG D-6 and the ONGC fields in the Krishna-Godavari (KG) Basin, leaving a deficit of 3.22 MMSCMD.Further, the government- owned APGenco is setting up a 2,100 MW gas-based power plant in Karimnagar and a number of private gas-based power plants with a capacity of 4,000 MW are coming up in the Krishna, West Godavari and East Godavari which require around 30 MMSCMD of natural gas,’’ he said