The FSRU/LNG terminal is planned with an initial capacity of 3.5 million tonnes a year and could generate 14 mmscm gas daily

Andhra Pradesh, which is in the throes of a severe power shortage, is likely to get relief by December 2013 when the floating storage and re-gasification unit (FSRU) off the Kakinada coast is set to commence operations.

The FSRU/LNG terminal, the first such facility on the East Coast, is planned with an initial capacity of 3.5 million tonnes a year and could generate 14 mmscm gas every day, translating into additional power generation of 2,800 MW by the gas-fired power projects.

“We have commenced the exercise to identify a suitable ship to house the terminal in the global market for acquiring it on a long-term lease,” a senior official told The Hindu.

Growing needs

The proposed facility, with an initial investment of Rs. 1,000 crore, would supply RLNG, a preferred feedstock for the power, industrial and other sectors to meet the growing needs of the State. The facility would engender the much needed boost for development of natural gas usage in the State and the required infrastructure for transmission and distribution.

The development follows a memorandum of understanding signed between GAIL Gas Limited, a wholly-owned subsidiary of Gas Authority of India Limited at the Partnership summit hosted here in January 2012. A joint venture, A. P. Gas Distribution Corporation, has been formed to execute the project.

Price may come down

The APGDC official, who did not wish to be quoted, said the RLNG produced at the terminal could be priced at around US $ 18 a Million Metric British Thermal Unit (MMBTU) going by the current pricing level, but it could come down by the time the unit becomes operational. The generation cost could reach a high of Rs. 8.6 a unit covering fixed and variable costs, given the current level of pricing.

Infrastructure and Investment Department Secretary Sunil Sharma said the joint venture would be funded by the APGDC with the support of GAIL, while the State Government would facilitate necessary permissions, registrations, approvals and clearances from the departments concerned.