KOLKATA (miningweekly.com) – India’s Shipping Ministry has drawn up guidelines for setting up floating storage regasification units (FSRU) for liquefied natural gas (LNG) at all major ports in the country.
The new guidelines aim to promote a shift from land-based LNG storage terminals to offshore units, as the latter cost less and can be built quicker.
“The demand for LNG in the country has been increasing and it is the stated policy of the government to double the share of LNG in the energy mix. LNG imports are substantial since domestic supply of LNG is not able to meet demand and higher imports need supporting infrastructure to be developed,” the Ministry says.
“FSRU within port areas offer a low risk, fast track and flexible option compared to traditional onshore LNG terminals,” the Ministry notes.
As per the new guidelines, private investors will be granted rights to construct an unit through e-tendering, wherein the reserve price will be the water area charges set by respective port authorities and bids offering the highest premium over the reserve price will be granted construction rights for a period of 30 years.
The port authority will also be permitted to charge a lease rental for the entire licensing period and the investor making a total upfront payment on successful e-bidding.
In addition, a FRSU operator will need to pay port dues, berth charges, pilot charges for pilot vessels, wharfage to the port authorities as per respective charges fixed from time to time.
Investors also have to submit a performance guarantee of completing construction within two years of its bidding and will be liable for its bank guarantee provided to be encashed by the port authority, the guidelines state.
Commenting on the new framework, officials said this week that while some major ports like Mumbai Port Trust (MPT) had floated tenders inviting investors to construct FSRU storage facilities, there had not been any response, presumably in absence of a policy framework of the government.
Some private investors have announced FSRU LNG storage facilities along India’s eastern coastline, but these are largely outside the governance purview of the central government or port authorities as there was no policy guidelines at present.
Real estate major, the Hiranandani Group, which operated an FSRU facility in Maharashtra in the west, has proposed a similar storage facility in West Bengal along the Bay of Bengal coast, while two more were on the anvil along the coast of Andhra Pradesh, at ports of Kakinada and Krishnapatnam.
Currently natural gas accounts for 6.5% of India total energy mix. To increase LNG’s share in total energy mix to touch 15%, total LNG storage capacity has to be increased to 47.5-million tons, almost double of capacity currently available at terminals across the country.