Bid & Tender
Augmentation of LNG Terminal Project in Kerala Remains a Pipe Dream

Date : Feb 06, 2017

The schemes envisaged to boost the use of natural gas in Kerala are moving at a snail’s pace, despite the state being home to South India’s only LNG terminal. Data available with the Petroleum and Natural Gas Regulatory Board show the number of natural gas connections rose to 78 by November-end from 16 in the beginning of the financial year, although still remains the lowest in South India. Currently, Karnataka and Andhra Pradesh are in the forefront of adopting natural gas in South India.

 

After rolling out the city gas project last year, not a single CNG outlet was opened in the state to dispense fuel to vehicles. The time is ripe for Kerala to take advantage of the LNG terminal, in view of the reduction in Customs duty in the Budget (from 5 per cent to 2.5 per cent). “Currently, FACT and Kochi-Refinery are the largest consumers of natural gas in the state. LNG consumption at households and vehicles is yet to pick up momentum. All the new residential apartments in the state have the provision for natural gas connection. It is high time the government intervened to enhance the state’s LNG infrastructure,” said Kerala Chamber of Commerce and Industry chairman Raja Sethunath.

 

Currently, LNG accounts for 50 per cent of the gas demand in the country. “The issues pertaining to pipe laying by the PWD at Kalamassery have been resolved, and construction of CNG outlets at Kalamassery, Eloor, Kundannoor and Aluva is progressing. We expect to start work at two more stations soon,” said Ajay Pillai, deputy general manager of Indian Oil-Adani Gas, the implementing agency for the city gas project. Post-Budget, the government estimates LNG would become price-competitive. According to experts, states like Kerala should effectively utilise the opportunity. “The reduction of Customs duty is a positive move. Since the KG-D6 deal has turned out to be a damp squib, the country will increasingly be dependent on import to meet its LNG demand,” said energy analyst Sudha Mahalingam.