Petronet-LNG back in the race for Kayamkulam

Vol 7, PW 12 (27 Aug 03) Midstream & Downstream

Petronet-LNG can rest easy! After prolonged consideration, National Thermal Power Corporation has backed down and revised several clauses to its prequalification documents for the proposed 3m t/y gas or LNG tender for its Kayamkulam power plant in Kerala.

Without these amendments, Petronet-LNG would have been excluded from the list of regassification companies. NTPC made the amendments demanded by Petronet-LNG ten days ago, learns PETROWATCH.

Now, any company incorporated for the purpose of developing, financing and implementing a LNG regassification project is eligible to bid. This replaces the stringent clauses before where a company had to meet two conditions to be eligible.

First, it must have developed, financed and implemented a regassification project or made investments worth $500m in the oil and gas sector. Second, it must have a minimum Rs2,500cr ($520m) annual turnover.

Petronet-LNG, as a holding company with five principle shareholders - ONGC, GAIL, Bharat Petroleum, Indian Oil and Gaz de France - fulfilled neither condition and protested bitterly to NTPC. But companies keen to supply natural gas or LNG to Kayamkulam need just to be incorporated to be eligible.

"Petronet-LNG asked NTPC if it wanted to avoid competitive bidding for regassification," reveals a source. "If NTPC had not climbed down they would have been in a big mess.

Imagine one PSU drawing up its tender to exclude another PSU! There would have been uproar in parliament and complaints to the Central Vigilance Commission." Clearly worried, NTPC debated the issue internally and gave in. Monday, 25th August, was the deadline to buy pre-qualification documents.

Interested companies must submit the completed paperwork by 25th September after which NTPC will shortlist companies to supply natural gas or LNG; regassify it (if it's LNG); and transport it. Short listed companies will then be asked to submit technical and price bids.

NTPC is unwilling to share with us the dates to receive these bids. "We have set internal dates but it's confidential," said a NTPC official.

"By then we will also have gained from the experience of the (ongoing) Kawas-Gandhar gas tender. One thing we can tell you is that there's no change in the end date." NTPC wants 3m t/y LNG for Kayamkulam by 2007-08.