NFCL to offload Kakinada LNG project stake

As per the original plans, NFCL was expected to hold 70 per cent of the equity while the remaining was to be with Hardy Oil which it recently tied up for the project.

Though the NFCL is planning to replace naphtha with LNG as the feedstock at its fertiliser plant at Kakinada, its requirement is expected to be only around 0.5 million tonnesper annum which is only a fourth of the planned capacity of the LNG project.

However, the remaining capacity could be utilised by both the GVK group and the SPGL which operate the country8217;s first two power projects in the private sector at Jegurupadu and Kakinada respectively. Both are said to be looking at massive expansion and can utilise LNG instead of naphtha which would turn out cheaper.

Confirming the move to form the consortium, PK Madhav the NFCL director finance said the group was not looking at the project as a commercial venture. quot;We never had intentions of holding onto majority equity in the project which is basically meant for a strategic lock-in for raw materialsquot;, he said.

Though GVK itself has ambitious plans for a Rs 10,000 crore LNG project at Kakinada it is not clear whether the group would still go ahead with plans for such a large capacity pending a finalisation of the government8217;s LNG policy and considering the massive capacity already being created by other players in the countryincluding the public sector consortium Petronet.

Asked if negotiations had been struck with the companies, Madhav said there were enough like-minded companies which were willing to join hands for the projects which is expected to be completed in four years time beginning June 1999.