A new gas grid promised for Tamil Nadu

Vol 3, PW 22 (24 Nov 99) Midstream & Downstream

Further east in Tamil Nadu, the US company CMS Energy has announced it wants to construct a gas grid to distribute incoming supplies of LNG.

On Friday (19th November) CMS top brass held a surprise press conference in Madras to tell the world there will be an excess 0.8m tonnes a year of LNG when first supplies land in Tamil Nadu from July 2003. CMS is a member of the Dakshin Bharat Energy Consortium, which in December 1998 won a tender for the construction of a 2.5m t/y LNG receiving facility and associated 1,886-MW power plant at the port of Ennore.

We are looking beyond the Ennore project, said Brian Corbin, Vice-President and Managing Director, CMS Energy Asia, In the long term, we look forward to developing a gas distribution network from the Ennore terminal to other power and fertiliser projects. Corbin revealed that two consortia have been short listed for the EPC contract at Ennore and that a winner would be selected by December.

He added that CMS Energy is looking at other generation projects in Tamil Nadu with a view to possible acquisition. .

It is unclear why CMS has chosen now to issue such a high-profile declaration of intent. In addition to Corbin the press conference also heard senior CMS executives such as Doris Galvin, a company vice-president, and Clifford Lawrenson, Vice-President, Global Finance.

One explanation suggests that the Dakshin Bharat consortium is trying to put pressure on the Tamil Nadu Electricity Board (TNEB) to conclude talks on a Power Purchase Agreement (PPA). A report from Madras reveals that negotiations have come unstuck on the state governments inability to guarantee some kind of escrow cover for the project, a point hinted at by Corbin during the press conference.