Fertiliser companies advised to issue tender for LNG

Vol 6, PW 18 (06 Nov 02) Midstream & Downstream

IF MEMBER OF Parliament S.

S Palanimanickam has his way, state-owned fertiliser cooperatives IFFCO and KRIBHCO will float tenders to buy LNG instead of buying stakes in Petronet-LNG's Dahej project or Shell's Hazira project. This report learns Palanimanickam wrote to prime minister Atal Behari Vajpayee in October outlining his concerns.

Copies of the letter were copied to oil minister Ram Naik and fertiliser minister Sukhdev Singh Dhindsa. Writes Palanimanickam: "These cash-rich fertiliser companies are being trapped to commit their resources in meeting the fund requirements of petroleum sector projects (who) are also seeking a commitment to purchase LNG at a higher price." According to Palanimanickam, talk of IFFCO or KRIBHCO taking equity stakes in LNG projects is a smokescreen to divert funds from the fertiliser sector.

"I feel these fertiliser companies should purchase regassified LNG by seeking competitive bidding from the suppliers as is being done by NTPC, enabling them to get LNG at a competitive price rather than buying regassified LNG at the terms of the company like Petronet-LNG or Shell." If LNG is bought from Dahej or Hazira, says the MP in a second letter written in October, "Exxon Mobil (supplier of LNG for Petronet-LNG)and Shell (supplier of LNG for Hazira) would get excessive profits at the cost of the Indian economy." Palanimanickam wants Vajpayee to order the two fertiliser companies, "not to purchase costly regassified LNG that would result in an increase in fertiliser price affecting the cost of most important input for the farmers."