Petronet LNG Ltd, India's largest liquefied natural gas buyer, plans to lease out one of the two storage tanks at its newly-commissioned Kochi LNG import terminal to make the under-utilised facility commercially viable.
The 5 million-tonne-per-year LNG import facility, which was commissioned in September, operated at just 5 per cent of its capacity in the third quarter (October-December) of the ongoing financial year (FY14) as pipelines carrying the gas to customers are not yet ready.
"We have two football field sized storage tanks at Kochi. We had commissioned only one of them in absence of consumers," a top company official said. "We can lease out the other one."
Petronet plans to invite bids for leasing one tank within a month, he said.
The storage can be hired by a importer who is unable to discharge the volume at the nation's other operational terminals at Dahej, Hazira or Dabhol.
LNG, which is natural gas converted into liquid at sub-zero temperatures so that it can be transported in cryogenic ships, will be stored in its original form at the Kochi storages.
"The storage can also be used by an international firm which wants to buy LNG when rates are cheaper and sell to customers when rates firm up," the official said.
Kochi can be used as loading and reloading point by importers in Japan and Singapore.
The official said Petronet had seen its net profit fall by 57 per cent in October-December quarter to Rs 136 crore because of uncapatalised cost of Kochi terminal.
Interest payment on debt taken to build the Rs 3,300 crore terminal and depreciation cost was Rs 104 crore in the third quarter, which couldn't be capitalised in absence of volumes being generated from the terminal.
Annually, interest and depreciation cost would be Rs 400 crore, he said.
He said gas sale from Kochi will rise only after the Kochi-Koottanad-Bangalore-Mangalore pipeline, which is held up due to right of way issues, is commissioned.
At present, Petronet sells imported gas to consumers around the terminal as only 43-44-km of the planned pipeline is ready, he said.
Petronet currently operates a 10 million tonne a year import terminal at Dahej in Gujarat, which is plans to expand to 15 million tonnes by end 2016.
It has awarded the contract to build two storage tanks for Dahej expansion to IHI of Japan and the contract for the plant that re-converts the liquid gas into its gaseous state to Toyo Engineering of Japan.
Petronet will build third terminal at Gangavaram in Andhra Pradesh by 2017, the official added.