Essar Plans Rs 4,000 Crore Floating LNG Unit To Salvage Steel, Power Business
20 May 2016
Essar Group, which has been trying to foray into LNG terminal business, has finally decided to set up a floating storage and regasification unit (FSRU) near Hazira.
Essar Ports Ltd will be pumping in anything between Rs 3,500 crore - Rs 4,000 crore for the facility is could be a savior for the heavily debt-laden Hazira steel plant which has been hit by tanking demand for the alloy in recession-hit China.
"It was part of our plan to diversify the cargo handling facilities at our Hazira terminal. Our anchor client - Essar Steel and Essar Power have shown interest in buying LNG. However, it is only an intention to set up the facilities. We are yet to work on detailed plan," a spokesman for Essar Ports told TOI in an e-mailed response.
Besides steel, the assured availability of gas will also provide a huge succor to Essar Power's two gas-based plants in Hazira and Bhander that are lying idle.
The company would require 1,000 m additional waterfront besides at least 50 hectare land for the project, sources close to the development told TOI.
Essar is looking at the FSRU with a capacity of five million metric tonnes per annum (MMPTA). While the steel and power required about 2.5MMTPA, the company could consider selling the excess LNG in the open market.
Sources said that Essar Steel and Essar Power require 2.5 MMTPA.
Notably, Essar Energy had decided to convert its two gas-based power plants at Hazira and Bhander into coal-based units in 2013 following high cost of imported LNG as well as acute shortage of natural gas. However, if the FSRU project materializes, there would be no need for conversion.
"The fundamental advantage of an FSRU is that it's quick to implement. It can be set up within just about six to nine months. Flexibility is another big advantage as it can be easily shifted to regions depending on the gas requirement there," said Dhiren Desai, CEO of Ahmedabad-based Ethical Energy Petrochemical Strategies Pvt. Ltd, an energy consultancy firm.
Source : timesofindia.indiatimes.com