Hiranandani to enter LNG market

Mumbai-based Hiranandani Group will set up an 8 million tonne liquefied natural gas terminal at Dighi port in Maharashtra for captive use at its upcoming power plants and to cater to consumers in the power and fertiliser industry.

It will make the foray through its privately-held company Hindustan Electricity Generation, which spearheads the group's power plans. "Of the 8 million tonne, we will keep 40 per cent for our captive use. For the remaining, we are in talks with potential customers in the petroleum marketing companies, power and fertiliser industry," said Darshan Hiranandani, director, Hindustan Electricity Generation.

It plans to invest Rs. 10,000 crore (Rs. 100 billion) to set up a power generation capacity of 2,500 Mw near Pune.

He, however, declined to share investment numbers for the terminal saying it was yet to be decided.

According to industry estimates, setting up of 8 MT terminal could cost at least Rs. 7,000-8,000 crore (Rs. 70-80 billion).

The group plans to pump the surplus gas into the national gas grid through GAIL's Dahej-Dabhol pipeline. It is in discussion with gas producers in Africa and West Asia. 

Hiranandani said huge volume of gas is required and people should have options of different kinds of contracts.

"In the long run, gas market should become more liquid in India. LNG will always be cheaper than naphtha, and consumers in various sectors will benefit from switching to LNG," he said.

Spot Asian LNG now rules in the range of $11-12 per million British thermal unit (mBtu) and after regasification and taxes it costs around $16 per mBtu.

On being asked whether the country will find takers for imported LNG, considering its high price, he said: "We do not know whether the price of $4.2 per mBtu will be valid after April 2014."

The government had fixed the price of gas from RIL operated KG D6 field at $4.2 mBtu for a period of five years from April 2009, when gas production began from the country's biggest gas find.