Tata official casts shadow on viability of Trombay

Vol 4, PW 20 (08 Nov 00) Midstream & Downstream

More worrying than GAIL's lethargy in signing the Shareholder Agreement are reported comments by the managing director of Tata Electric Company, Adi Engineer, which puts the entire project in doubt.

On 31st October, Engineer was widely interpreted in the Indian press as saying the Tata Group has deferred a decision to invest its share of money in the company's Rs2,500 crore joint venture with TotalFinaElf to build a 3m tonnes a year (t/y) LNG complex at Trombay near Mumbai. "We would like to wait and watch before taking any financial decision," said Engineer, "There has been a simultaneous increase in the price of LNG along with crude oil.

We expect the situation to become clear by January." Engineer's comments have been met with bemused anger at Total, lead promoter of the Trombay project, resulting in friction between the two partners. The French major is confident that Engineer was speaking out of turn and that his comments do not have the support of Ratan Tata, Chairman of the Tata Group of Companies, who has a personal commitment to ensure Trombay happens.

Total's frustration at Engineer's comments is compounded by the fact that for the past two months the French company has been waiting for the Tatas to issue a formal response its LNG pricing formula. According to Total, its formula insulates the landed cost of LNG at Trombay against fluctuations in the price of international crude.

Is that possible

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