GSPC faces tough Mundra questions from IOC

Vol 21, PW 1 (05 Oct 17) Midstream & Downstream

IndianOil is undeniably inching closer to a 50% stake in the Mundra LNG terminal but GSPC has to answer some difficult questions before it can seal the deal.

Most important, says an IOC source, it wants a long-term sub-concession agreement in place at Mundra outlining the terms under which the waterfront and other infrastructure including land and marine services will be sub-let from Adani which holds a Gujarat Maritime Board lease. GSPC and Adani have been bickering over the much-delayed draft sub-concession since November 2012.

But our source oozes optimism that IOC's addition into the equation will shift things because of its good working relationship with Adani where the two are partners in several city gas retail joint ventures. IndianOil also holds a 39% stake at Adani's proposed Dhamra LNG terminal in Orissa and first rights to 3m t/y capacity.

Another important question for IOC is how GSPC worked out the annual lease rate of Rs65cr ($9.7m) payable to Adani for the use of the waterfront. IOC is also hoping a 'bridge loan' or short-term loan given by the Gujarat government to fund the terminal's construction will eventually be converted to a long-term loan.

Only then can the project achieve financial closure through a syndicated loan deal with 15 banks led by SBI Caps. "There are also several unresolved commercial disputes at Mundra," adds our IOC source.

"These are a priority."

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