Global oil major Shell will join the special purpose vehicle for executing the floating storage regasification unit (FSRU) for liquefied natural gas (LNG) at Kakinada.
The Infrastructure and Investment department had finally given its go ahead for inducting Shell as a partner in the SPV with equal tolling rights at par with GDF Suez with 26 per cent stake. The decision comes in the light of the recommendations given by a high-level committee of secretaries of key departments as well as the opinion of the Solicitor General of India.
In its order (GO Ms 4 dated July 19), the I&I Department said setting up of the first FSRU on the east coast would have the first-mover advantage and it was of strategic importance for the State to have the FSRU at the present location. Shell was an international market leader in the natural gas and LNG field with vast financial, technical and managerial expertise. The JV would benefit from the participation of Shell and the international oil major would add overall financial market value to the proposed FSRU project.
The order said the stake of AP Gas Distribution Corporation in the SPV would now be 48 per cent and it will control the composition for the board of the SPV for which necessary safeguards would be provided in the shareholders agreement to be signed. The equity structure of the APGDC would be restructured with AP Gas Infrastructure Corporation holding 52 per cent and GAIL Gas holding 48 per cent stake.
The management structure and other provisions of the shareholders agreement already agreed upon between GAIL Gas and APGIC would remain the same. The SPV for the Rs 3,600-crore LNG terminal was formed last year between AP Gas Distribution Corporation (APGDC) Limited and GDF Suez LNG UK Limited. It would be able to provide fuel for generation of 2,500-MW power.
Kakinada Seaports Limited and APGDC, a joint venture of GAIL Gas Limited and AP Gas Infrastructure Corporation, signed the memorandum of understanding for the project in May last year with provision that they would be enabled to enter into commercial agreements.
