Vol 3, PW 8 (12 May 99) Midstream & Downstream

Tamil Nadu is considering asking members of the winning consortium behind a TIDCO-promoted LNG project to part-fund construction of Ennore port.

A high ranking official in the local Tamil Nadu government tells Petrowatch that Delhis lethargy in funding Phase II of the ports construction risks holding back the whole project. The official admits one proposal being examined in detail is to ask the Siemens-led consortium to fund Phase II of the port construction by adjusting the cost against the port charges it would have to pay from 2003, when LNG begins to arrive.

In December last year the Dakshin Bharat Energy Consortium (Siemens, Unocal, Woodside, CMS Energy and Grasim Industries) won a $1.5bn tender to construct a 2.5m tonnes a year (t/y) LNG re-gassification terminal and adjacent 1,875-MW power plant at the port of Ennore, near Madras. Construction of Phase II at Ennore is a key link in the LNG chain but has consistently proved to be the projects Achilles heel.

Tamil Nadu has tried to speed up construction of Phase II with offers of money to the Ministry of Surface Transport in Delhi - responsible for the ports construction. One estimate puts the cost of Phase II (for dredging, road-rail linkages and a Single Buoy Mooring offshore) at around Rs300cr ($72m).

Chief Minister N Karunanidhi has written three letters to Prime Minister Vajpayee on the issue but to no avail. All the proposals have been rejected, ostensibly because port construction is a central government monopoly, in reality because Thambi Durai, the former minister in charge is an enemy of Karunanidhi.

Durai gone, Tamil Nadu is again looking at private sector options for the construction of Ennore Phase II.

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