Others follow Torrent to claim 5% LNG tax break

Vol 20, PW 3 (20 Oct 16) Midstream & Downstream

With huge potential savings, it's astonishing more companies are not exploiting a 5% government tax break for gas-based electricity generation utilities in India that import LNG on their own.

That could soon change with news that two companies in Gujarat are following the lead of Torrent Power and have imported LNG directly from the global market, bypassing re-sellers Petronet-LNG, GAIL, IndianOil and Bharat Petroleum. Together with parent company GSPC, state-owned GSPC Pipavav Power Company (GPPC) and Gujarat State Energy Generation (GSEG) took delivery of 159,189 cubic metres at Dahej on October 9 sourced through Shell-affiliate SITME from Trinidad & Tobago at $6.28/mmbtu.

Still unclear is how much each takes in this three-way split. But in no doubt is the final destination of GPPC and GSEG's share.

For GPPC it's a brand-new 702-MW power station at Pipavav, tainted by association with Mumbai-based Swan Energy, but idle since it was commissioned five years ago and in need of 3.52m cm/d to re-start. For GSEG it's a 507-MW power station at Hazira in operation since 2002 but plagued with gas supply problems.

"At least with R-LNG," says an analyst, "these two power plants can now run at 40% to 50% PLF (Plant Load Factor)." If GPPC and GSEG had imported LNG through Petronet-LNG, GAIL or any other re-seller they would have had to pay an additional 5% in customs duty.