Petronet LNG Ltd is awaiting a firm power purchase commitment from the Gujarat Government controlled utility, to finalise investment plans in a 370 mw gas-based power plant behind its existing re-gas facility at Dahej in Gujarat. The LNG aggregator is expecting a decision in this regard in the next three months.

“We are awaiting firm purchase commitment for a part (anticipated to be anything between one-third to half) of the production to finalise our investment plans in a 370 mw LNG based power project. The residual production will be sold as merchant power,” Mr A.K. Balyan, Chairman, Petronet LNG Ltd (PLL) told newspersons in Kolkata on Thursday on the sidelines of a FICCI seminar.

While official confirmations were not available, PLL is reportedly having a MoU in this regard with State controlled GSPC group. GSPC group has two gas-based power utilities — Gujarat State Energy Generation Ltd (GSEG) and Gujarat State Pipavav Power Company Ltd (GPPC).

“We are expecting the State utilities to take a call on the firm purchase agreement in the next two to three months,” Mr Balyan added.

While the firm purchase-commitment is expected to safeguard PLL from the downside risk of merchant power segment, Mr Balyan is hopeful that the LNG-based power would, in the longer run, prove to be cheaper than imported coal-based thermal power.

“We will cap the tariff below Rs 5 a unit. I am sure, in the long run it will prove to be cheaper or at par with the imported coal fired generation,” he added. In the long run, PLL planned to set up three units of 370 mw.

On the spot-LNG purchases, Mr Balyan said that the total number of spot cargo purchases during the year should remain more or less same to last year's level of 30.