Rediff.com« Back to articlePrint this article

BG seeks nod for new LNG terminals

December 22, 2003 14:33 IST

British Gas plc (BG) has sought the government's approval to construct, own and operate liquid natural gas terminals in India and explore 'other opportunities' in the country.

The company had recently put its $550 million Pipavav LNG project in Gujarat on the backburner saying the project did not look viable.

The company has filed an application with the Foreign Investment Promotion Board wherein it has sought to construct, own, operate LNG terminals with related facilities including marine facilities, regassification, storage and pipelines for transportation, government sources said.

They added that while BG has made no mention of its plan to shelve the Pipavav LNG Project for the time being, it has clarified that since the existing wholly owned subsidiary had been granted approval with specific reference to the Pipavav Port, it was placing on record that the current approval was required for other projects.

"We would like to explore other opportunities in the LNG sector in India," the company said without providing any detail.

The proposal has raised eyebrows in the petroleum ministry which has sought to clarify whether BG's letter to the FIPB was "just an information" or a proposal for fresh projects.

Industry sources said BG may be trying to keep all its options open with fresh developments taking place at Pipavav.

Nicole McMohan, director (policy and corporate affairs), British Gas India, reiterated that BG had only temporarily put the Pipavav project on hold.

However, BG India expects to continue playing a role in the LNG sector.

McMohan said: "In order to grow its business in India, BG continually monitors opportunities."

BG Plc (UK) had been granted approval on September 22, 1997, to set up a wholly owned subsidiary --f BG Pipavav LNG Ltd --f to contract, own and operate an LNG import terminal.

The government allowed BG to invest $140 million as equity, to be subscribed by BG Plc through its subsidiary BG UK Holdings Ltd and/or other subsidiaries, associates and nominees of the company. The Secretariat of Industrial Assistance has put up the proposal for consideration of the board at its next meeting on Friday.

BG Pipavav LNG's original foreign collaboration agreement expired on February 21, 2001. But the company filed for a fresh foreign collaboration agreement with the Reserve Bank of India/authorised foreign exchange dealer within the extended period, and the approval is hence perpetual.

Partha Ghosh /Hemangi Balse in New Delhi/Mumbai