08 December 2019

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LNG to Change the Industrial Landscape of South India

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The liquefied natural gas (LNG) will soon change the destiny of industrial landscape of South India. It will not only push up the profitability of the existing units to a new height but make the region the most favorable destination of the investors.

Petronet LNG (PLL), a company promoted jointly by GAIL, ONGC, IOC and BPCL is setting up a Rs.4000-crore LNG terminal at Puthuvypin off Kochi. The terminal has a capacity of 2.5 million metric tonnes per year (MMTPA) which will be later raised to 5 MMTPA. The liquefied
natural gas unloaded to the terminal from the oil tankers will be re-gasified and supplied through pipeline networks to the end users.

GAIL, a Navaratna Central public sector unit with the assistance of the State-owned Kerala State Industrial Development Corporation(KSIDC) will distribute the gas.

GAIL will facilitate two gas pipelines, namely the
Kochi-Kanjirakode-Mangalore/ Bangalore pipeline and the sub-sea gas pipeline from Kochi to Kayamkulam. The 1,114 km Kochi-Bangalore-Mangalore pipeline is estimated to cost Rs 3,032 crore and the Kochi-Kayamkulam pipeline needs Rs1,000 crore. The  pipeline is expected to be commissioned by 2012.

The Gas Task Force has estimated a requirement of 13 mmscmd of gas for various projects in the State, excluding the requirement of gas for the expansion scheme of NTPC, Kayamkulam.   In addition to this, there is a need of 7 mmscmd of gas for various foundry and textile units
based at Coimbatore, which is less than 200 km away from the proposed LNG terminal in Kochi and gas-consuming industries in Mangalore-Bangalore belt.  While 80 per cent of the demand in Kerala comes from industrial sector, the balance will be from auto sector for compressed natural gas.

Easy availability of gas will open up tremendous opportunities in the power sector, leading to gas based power projects coming up in the region. This in turn, will provide a major fillip to industries in the State since cheap power (compared to power generated using Naphtha,
diesel etc) will be available to industries and the cost of industrial production is thus expected to come down. Moreover it will have a tremendous cascading effect on numerous ancillary units in the power sector too. In fact,   the projects will be the harbinger for massive
industrialisation in the state.

The immediate beneficiaries of the project in Kerala are the NTPC power station at Kayakualm and Fertilizers and Chemicals of Travancore (FACT). The 350 MW NTPC thermal power station at Kayamkulam now uses naphtha, a very costly petroleum product. Since its price shows the
tendency of unpredictable fluctuation and the fuel is imported, the price of power generated by the station varies widely.

This discourages Kerala State Electricity Board (KSEB), the sole purchaser of the power from the unit, to buy power from it. Now KSEB purchases power from the station only in emergencies.NTPC has a plan to make the Kayakulam unit a super thermal power station by raising the capacity to 2300 MW. In fact, Prime Minister Manmohan Singh laid the foundation stone for the expansion work nearly
five years ago. But NTPC had to indefinitely postponed the project for non-arrival of the cheap fuel. Now it has become a reality and NTPC will soon kick start the work soon.

The cheap power from the Kayamkulam will really boon for the many existing unit and those in the pipeline.The Indian Railway is taking over the South India's largest foundry unit at Cherthala near Alappuzha owned by Steel Industries Kerala Ltd, a state-owned firm. At the foundry the railway will make the frames of rakes and other vital components required for it. Preliminary agreement has been signed. The final pact will be inked soon. Cheap power from the Kayamkulam NTPC power station will be a windfall for the factory.

Several ancillary units will spring up in and around Cherthala to supply various components required to the proposed Indian Railways Component Factory. The uninterrupted quality power at low price will really lure lot of small and medium metal-based units to the area.
Similarly, once loss-making Cochin Shipyard has entered the placid waters. Now a mini-Navaratna company, the shipyard, a Central Public Sector Unit, is a major shipbuilding unit in South Asia. As many as 18 ships including the country's first indigenous aircraft carrier are being built in the shipyard.

The shipyard sources its requirements from small and medium steel fabrication, forging and foundry units across the states and the neighbouring states. Power at low prices will be highly beneficial for both the shipyard and these units. Besides, several companies in the State have already signed agreement with GAIL to purchase LNG it
supplied to the State for its proposed captive power plant and other fuel purposes. The major companies which have signed the agreement are DC Power Ltd, Indsil lectorsmelts Ltd (IEL), Apollo Tyres Ltd (ATL),  Premier Tyres Ltd (PTL), Kerala Minerals and Metals Ltd, Excel Glasses Lt, BPL Power Project Ltd and Kasargod Hindustan Companies DC Power is setting up a 107 MW gas-based power plant at
Kasargod and its estimated demand of LNG would be 0.65 mmscmd. The requirement of IEL, which proposes to set up a 50 MW gas-based power plant at Palakkad is estimated at 0.24 mmscmd of gas while the demand of ATL and PTL is estimated at 56,000 nm3/day as the companies would
be shifting to environment-friendly natural gas from furnace oil for their operations, it said.

Discussion is on with other prospective customers such as FACT Ltd.Kern Newsprint Ltd, KSEB and Kochi Refineries Ltd (KRL) for supply of gas.LNG will breathe a new life to the gasping FACT. Country's one of the oldest fertilizer units, it depends on imported raw materials like
sulphur and rock phosphate.   This technology is outdated and highly expensive. With the availability of LNG, it can switch over to the low-cost and modern gas cracker technology. It will bring out the firm from the red.

The gas will also help the food processing units in Kerala improve their hygiene standards (HACCP) which is key factor for acceptance of products in the export market. The presence of clean and efficient fuel in the processing will undoubtedly ensure better value addition and boost exports. It will be a shot in the arm for the hundreds of the small and medium metal units in Coimbatore and knitting units in Thiruppur.  Annual turn over of the metal units alone is over s.25000 crore. But both the
steel and textile units can utilize only the 50 per cent of the capacity in many years owing to the severe power shortage in Tamil Nadu. The LNG is the permanent remedy for their perennial bane.


Last Updated ( Monday, 05 July 2010 17:15 )  

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