State-run Indian Oil Corporation has reportedly scrapped a plan to acquire a 50 per cent stake in the Mundra LNG terminal in Gujarat.
The Indian Oil board as far back as August last year approved a 50 per cent stake in the 5 million tonnes per annum (mtpa) terminal for about Rs 750 crore. GSPC LNG Ltd, a unit of Gujarat State Petroleum Corp. Ltd (GSPC), is building the Rs 5,000-crore project. GSPC owns a 50 per cent stake in it, while the Adani Group has a 25 per cent stake.
"Indian Oil recently informed GSPC LNG that it would not like to go ahead with its plans of picking up a stake in the terminal," a Gujarat government official aware of the discussions told Mint. It is, however, not clear if Indian Oil would still book LNG import capacity in the terminal, it said.
Prime Minister Narendra Modi inaugurated the Mundra LNG terminal in October. It is the third LNG re-gasification project in Gujarat. Petronet LNG's Dahej terminal and the Hazira project of Shell Gas BV, a unit of Royal Dutch Shell Plc, are the other two.
"Indian Oil carried out due diligence for the project and has found that there are some issues that come in the way of their proposed plans," the website said quoting one of the officials.
Indian Oil is concerned about the delay in signing a concession and sub-concession agreement between the special purpose vehicle, GSPC LNG, and maritime regulator Gujarat Maritime Board, according to the report. The spending GSPC LNG has made for the port and port-led development is another worrying matter for the refiner, the official said.
According to industry sources, the GSPC LNG has invested about Rs 1,200 crore for dredging and other port-led development, an expenditure that Indian Oil finds hard to justify. This additional expenditure was not part of the discussions when the Indian Oil board approved the investment.
The berthing facility for receiving LNG tankers and storage tank facilities for regasification and gas evacuation is integral to the Mundra LNG terminal project whose capacity can be expanded to 10 mtpa.
Petronet LNG's facility has 15 mtpa import capacity while the Hazira terminal that is run by Shell has 5 mtpa capacity. Indian Oil has already acquired a 39 per cent stake in the proposed 5 mtpa LNG import terminal at Dhamra, Odisha, in which the Adani Group has a 50 per cent stake with the remaining 11 per cent held by state-owned gas utility GAIL India Ltd.