Still no financial closure for Swan's FSRU plan

Vol 20, PW 11 (23 Feb 17) Midstream & Downstream

Construction has definitely started! But crucially, Mumbai-based Swan Energy still hasn't reached financial closure for its FSRU project at Jafrabad on the south Gujarat coast - a story we've been hearing for two years.

Blame it on the banks. Poor loan screening procedures and a tendency to disburse loans to anyone with contacts or political influence have resulted in a major cash-crunch at Indian banks.

"Bank balance sheets are bad because of the depressed climate," reports a source. "Even government-guaranteed projects are struggling to raise money.

These days bankers have a very low appetite for risk." He believes, however, that Swan will - eventually - reach financial closure. "It's only a matter of time, that's all," he says.

"About 70% of the fixed construction work has already been awarded." In December, UAE-based National Marine Dredging Company began laying the groundwork for a Rs2200cr ($321m) 2.1-km breakwater and 600-metre jetty. "Swan is financing this through equity contributions," he adds.

Confident, Swan predicts the project will be constructed by September 2019 with a FSRU in place the following month and commercial operations underway from December 2019. "About 35 managers from National Marine are at the site," we hear.

Another promising sign is news of talks with Mumbai-based Tata Realty apparently interested in buying 10% of Swan's 74% stake in the 5m t/y proposal. "Discussions have just started," confirms Swan.

"But it's too early to talk of valuations."

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