IOC, Gail pen MoU to take equity in Adani’s Dhamra LNG project

State-owned Indian Oil Corporation and Gail have officially signed the previously reported memorandum of understanding with Dhamra LNG for taking equity in the 5 mtpa LNG import terminal proposed for Dhamra Port, Odisha.

Under the memorandum of understanding, Dhamra LNG will be an equal joint venture of IndianOil and Gail on one hand and Adani Group on the other, Gail informed in its statement.

IndianOil and GAIL would acquire 39 percent and 11 percent equity respectively in Dhamra LNG with the remaining 50 percent being held by Adani group. IndianOil and Adani Group will divest 1 percent each to a financial institution which will then own a 2 percent stake in the project.

Apart from equity, IndianOil and Gail intend to book regasification capacity of 3.0 and 1.5 mtpa respectively in the terminal, Gail said.

The Dhamra LNG terminal would enable India’s eastern states of Odisha, Bihar, Jharkhand and West Bengal to reduce its carbon footprint by using natural gas in transport and other industry sectors.

In addition, the terminal would meet the requirements of the oil refineries of IndianOil situated in Barauni, Haldia and Paradip, as well as three fertilizers plants at Barauni, Sindri and Gorakhpur which are being revived by the government of India.

Natural gas from the terminal will also be supplied to city gas distribution networks being built in eastern India. for further distribution to households, natural gas vehicles fueling and other industries.

In addition, Gail informed that the Cabinet Committee on Economic Affairs approved Capital Grant of 40 percent, amounting to Rs. 5,176 Crores (approx. US$772 million) over 5 years, for Jagdishpur-Haldia and Bokaro-Dhamra Pipeline (JHBDPL) project, which is being implemented by GAIL at a total capital outlay of Rs. 12,940 Crores (approx. $1.93 billion).

The 2,539 km long pipeline is expected to be completed by December 2020 and will connect UP, Bihar, Jharkhand, West Bengal and Odisha.

The total investment in the Dhamra LNG terminal, the JHBDPL project and the accompanying local city gas distribution networks amounts to Rs 51,000 Cr (approx: $7.61 billion)

1 Indian Rupee = 0.0149288 USD