Kochi

Petronet offers to reduce natural gas price for FACT

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The firm yet to respond to the proposal

Petronet LNG Limited (PLL) will offer special rates on natural gas for supply to Fertilisers and Chemicals Travancore Limited (FACT), which is reeling under a financial crisis. Petronet, which commenced operations earlier this year at the 5mmtpa (million metric tonnes per annum) terminal set up at Puthuvype here, is ready to supply gas at $12 per mmbtu (million British thermal units) approximately to FACT, in a bid to help the public sector fertilizer unit, apart from facilitating growth of the natural gas-based industry in the State, A.K. Balyan, Chairman and Managing Director of PLL, told The Hindu.

The new offer was put forward a fortnight ago, but FACT was yet to respond, according to him. Mr. Balyan said that the new price was lower than that of naphtha, the fuel used by the fertilizer unit prior to the induction of natural gas-based manufacturing process.

Asked for his comments, FACT CMD J. Srivastava told The Hindu that the fertilizer company would not be able to utilise natural gas at a landed cost (at FACT) beyond $12. The latest offer comes with additional costs, including taxes and transportation. The gas could cost anywhere between $15 and $17, according to him. FACT had stopped using natural gas for its ammonia manufacturing plant due to unviable prices and has started importing ammonia, he said.

The Union government is understood to be taking serious efforts to sort out the issue and is expected to come out with a package for two years.

The package could include components such as supply of natural gas at reduced rates. A decision is likely by month-end.

Petronet had invested about Rs.4,000 crore in its project in Kochi and LNG tankers had offloaded gas at the terminal, but the distribution had been tardy, thanks to poor pipeline infrastructure. GAIL India Ltd, entrusted with the task of laying pipelines to carry gas to northern Kerala and beyond through two separate lines, one bound for Bangalore and another for Mangalore, has not been able to execute the project owing to public dissent over land acquisition.

Petronet has decided to lease out part of its storage capacity in Kochi as the terminal resource was idling away, eating into the profit of the company.

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Printable version | Jan 28, 2020 3:09:08 PM | https://www.thehindu.com/news/cities/Kochi/petronet-offers-to-reduce-natural-gas-price-for-fact/article6333816.ece

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