interview | Darshan Hiranandani Other States

H-Energy plans to fuel rural India through ‘bullets’

Mumbai: Hiranandani Group’s energy arm H-Energy on Tuesday unveiled India’s first floating storage and re-gasification (FSRU)-based LNG terminal of 4 million tonnes per annum capacity at Jaigarh port in Maharashtra. The FSRU, inaugurated by Chief Minister Devendra Fadnavis, will be operational by 2018-end. Darshan Hiranandani, MD & CEO, H-Energy, in an exclusive interaction with The Hindu talks about the company’s strategy for a gas-based economy. Excerpts.

Why did you choose FSRU over a traditional onshore LNG unit?

In a regular onshore LNG unit, the economies of scale determine the profitability. The beauty of this project is that with 4 million tonne FSRU, I have the same comparable per-tonne cost as a large 10 million tonne LNG terminal.

What was the investment in building the LNG terminal and how long will you take to recover it?

It cost us ₹1,600 crore and the recovery time depends on the market, but we are hoping it will take four to five years.

Do you have contracts with any global sellers of LNG?

We have signed an agreement with Petronas, but the details are confidential.

Have you tied up with local buyers?

We have tied up with three local buyers. It’s up to them to disclose their identity.

Have you signed any long-term LNG contracts?

They are spot and medium contracts.

Why no long-term LNG contracts?

Contracts are not reliable in this country and business models change. Today people don’t know what technology their own plant is going to run on. So there’s no point in telling somebody you sign with me for 20 years as they don’t know what their business model will be in that time. You know your business model for the next three years, I’ll give it to you. You want it this year, I’ll give it to you. You only want one cargo, I’ll give you that. Be sure, be comfortable, everybody remains happy in the whole equation.

Are you planning to give piped gas connections to the neighbouring areas?

It’s a very simple initiative. The reason why gas doesn’t reach rural areas is because it’s unviable to put pipes when the density is low. Now what we’re trying to do is fill CNG bullets right here and send these to slightly denser pockets within rural areas. We’ll send the bullets straight there. From there they only have to put a small pipe, like the fibre optic for cable TV that comes at home. The idea is that we do away with the big 30-inch steel pipe that costs a million dollars a kilometre, then a 12-inch pipe that costs half a million dollars a kilometre — that’s the way the old system works. We say let’s short-circuit the system. Fill it right here in bullets, send it to the villages, and we’ll replace it once a week. We are hoping the bullets will start by March next year.

How can you supply gas when the existing distributor can’t?

They can’t start connections because they have no gas. Users in Maharashtra pay 5% more than those in Gujarat due to Value Added Tax, making gas expensive. So they don’t buy it. Even if they connect somebody, what’s the point when there’s no gas to switch on?

How is the market for LNG in India? Do you think the government’s goal to make natural gas constitute 15% of the energy sector by 2020 is possible?

It’s a conservative goal. It all has to do with infrastructure. If I connect more people, they will all want to use it. If I have 6% usage with 1.5% connections, versus diesel and coal that reaches everywhere in the country, I think it’s an easy target. We have to use new technology to short-circuit the heavy capex. I’m saying it’s still needed. Is pipeline the best way to supply? Yes. But perhaps not in phase one. Start with bullets, start with LNG bullets, let’s get it going.

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Printable version | Nov 30, 2020 6:52:52 AM | https://www.thehindu.com/news/national/other-states/h-energy-plans-to-fuel-rural-india-through-bullets/article23806664.ece

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