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LNG Bharat to sell stake in 2 companies to global parts suppliers

LNG Bharat, which is building an LNG terminal at Krishnapatnam Port in AP, may offer stakes in two project-specific companies it has floated to global equipment suppliers.

, ET Bureau|
Updated: Jan 01, 2016, 05.46 PM IST
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LNG Bharat, which is building an LNG terminal at Krishnapatnam Port in Andhra Pradesh along with related pipeline infrastructure, may offer stakes in two project-specific companies it has floated to global equipment suppliers. (Representative image)
LNG Bharat, which is building an LNG terminal at Krishnapatnam Port in Andhra Pradesh along with related pipeline infrastructure, may offer stakes in two project-specific companies it has floated to global equipment suppliers. (Representative image)
HYDERABAD: LNG Bharat, which is building an LNG terminal at Krishnapatnam Port in Andhra Pradesh along with related pipeline infrastructure, may offer stakes in two project-specific companies it has floated to global equipment suppliers.

The joint venture between oil and gas exploration firm KEIRSOS Petroleum and Apollo Hospitals co-promoter Shobana Kamineni and husband Anil may sell up to a 49% stake, LNG Bharat Managing Director Murthy Jasti said.

Some of the equipment suppliers for the projects, including Mitsui of Japan for the special purpose vehicle executing the floating LNG terminal and China Petroleum Pipeline for the SPV developing the pipeline, are keen on picking up a stake, Jasti told ET.

“The management would like to confine to divesting marginal stakes in these two SPVs for the time being and look at divesting up to 49% each subsequently, based on the progress of the project to fetch better valuations.”

LNG Bharat is building the five-million-tonne floating LNG terminal at Krishnapatnam with an investment of Rs 1,400 crore and Jasti claims it to be the first on India’s eastern coast with its own associated natural gas pipeline infrastructure.

Its part owner, the KEI-RSOS group, operates five marginal gas fields in the KG Basin and markets the gas produced from there to industries in the East Godavari district of AP.

“To begin with, the Indian promoters would hold equal stakes in the firm and the project would be funded through a 3:1 debt-equity where the finances are expected to be firmed up over the next few months,” Jasti said.

Sector regulator Petroleum and Natural Gas Regulatory Board has already awarded approval for 250-kilometre gas pipeline infrastructure to the gas pipeline SPV – Gas Transmission India – connecting Ennore, Nellore, Krishnapatnam, Sullurpeta and Renigunta, said Jasti.

LNG Bharat has appointed IDBI Capital for a detailed feasibility and financial viability report for the entire project, apart from mandating it to arrange the debt required from Indian lending institutions.

Jasti said the joint venture has agreements with several global equipment suppliers for the LNG terminal and pipeline infrastructure. The partners include InoxCVA for cryogenics technology, Exmar of Belgium and SPT of the UK for LNG terminal operations, ENN China for LNG and gas marketing, and China Petroleum Pipeline Co for gas pipeline infrastructure.

The equipment suppliers and prospective equity partners have also offered to help the joint venture with cheaper debt funds from their respective national agencies, he said.

“We expect to complete the financial closure in 16-20 weeks and hope to complete the project by the end of 2017, since the Krishnapatnam Port has assured to build the LNG berth and marine logistics simultaneously,” said Jasti.
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