Discussions are on to exploit the opportunity for having a power generation facility integrated with the LNG receiving and regassification facility.

The Kerala government and Petronet LNG Limited have discussed several options for the proposed 1,200 MW gas-based power generation facility on Puthuvype Island. The options include a 50:50 joint venture and the possibility of the State government buying at least 70 per cent of the power generated at the facility.

Managing director and chief executive officer of Petronet LNG Limited A. K. Balyan told reporters here on Thursday that discussions were on between the government and Petronet on exploiting the opportunity for having a power generation facility integrated with the LNG receiving and regassification facility, which is nearing completion on Puthuvype Island.

According to him, the integrated plant offered the best chance of reducing the cost of power as there would be no transport cost on the gas being used to fuel the power plant.

There will be no VAT on the gas as there will be no sale. Besides, there will be other fiscal benefits like customs duty waiver.

The integrated power plant also offered about eight to nine per cent higher efficiency by using the cold energy. These factors make power from the proposed plant more viable even at higher gas cost, Mr. Balyan said.

He is bullish on the future availability of natural gas the world over. With the U.S. emerging as a potential exporter and demand stabilising in Europe, more gas would be available across the globe. Increased production in Australia, Russia, in African countries like Ghana, Nigeria, Angola and Mozambique and in Qatar augured well for the markets in Asia, he said.

Petronet LNG, a joint venture among oil companies in the country, will have a total capacity of 25 million tonnes of natural gas by 2018.

Mr. Balyan said that the LNG terminal in Kochi is nearing completion and it would be ready early 2013 in tandem with the companies taking the first supplies of natural gas completing their conversion works. The first supplies will go to seven companies around Kochi, including major public sector units like Bharat Petroleum Corporation and Fertilizers and Chemicals Travancore.