AP govt signs MoU to set up Rs 5000 cr LNG terminal - moneycontrol.com

Posted - May 14, 2013, 10.47 PM IST - moneycontrol.com CNBC-TV18’s Appaji Reddem and Ashmit Kumar.

Andhra Pradesh govt signs a MoU to set up a Rs 5000 crore floating LNG terminal, which has the potential to not just solve the power shortage in the state, but could even make it power surplus.

The AP government has signed a MoU (memorandum of understanding) to set up a Rs 5000 crore floating LNG terminal, which has the potential to not just solve the power shortage in the state, but could even make it power surplus as well report CNBC-TV18’s Appaji Reddem and Ashmit Kumar.

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Faced with a power shortage of 2500 mw, 90 percent of gas based power plants in Andhra Pradesh are today sitting idle, but not for much longer.

The Andhra Pradesh gas distribution corporation limited (APGDC) has signed a MoU with Kakinada seaports limited for the state's first floating, storage and re-gasification unit (FSRU) based LNG terminal at Kakinada.

APGDC is a joint venture of GAIL  gas and AP Gas Infrastructure Corporation and the estimated Rs 5,000 crore project is being jointly funded by APGIC, Kakinada sea ports and GAIL gas.

Ganta Srinivasa Rao, minister for infrastructure and investment, AP says, "FDI through GDFC’s contribution is going to be pumped into this project. There is going to be employment generation of 1,000 people directly or indirectly."

So, how will the new terminal help?

Touted to be the first of its kind on the east coast, the two-phase project is expected to ensure 12 mmscmd of gas. Now, that is sufficient to fuel gas power plants to produce the required 2,500 mw by 2017. Moreover, the expected gas from the proposed LNG terminal will be cheaper as well. But, at the same time, the Chief Minister has a word of caution for stake holders

N Kiran Kumar Reddy, CM, Andhra Pradesh says, "There is going to be a lot of competition when coal is available, when D6 comes back, the reason for D6 reducing is still a mystery. By the time D6 comes back into production, we'll have lot of competition and we should go ahead competing with others in getting gas at a reasonable price."

If everything goes according to plan, AP will have surplus power which can be sold to neighbouring states. Infact according to an estimate, if AP's power plants become fully functional, the state will be able to sell about 5,000 mw of power by 2017.

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