The fresh memorandum of understanding (MoU) signed three days ago between Chief Minister N. Chandrababu Naidu and GAIL Chairman B.C. Tripathi to start liquefied natural gas production at the floating LNG terminal in the Kakinada deep water port (KDWP) may not come true in the next 18 months.
Oil and natural gas analysts say the consortium – comprising the Andhra Pradesh Gas Distribution Corporation (APGDC), GDF Suez, Shell and GAIL – has previously failed to achieve that target and even basic operations have not started in 18 months, though the preliminary hurdle of a public hearing has been crossed.
GAIL sources say last year’s MoU was only a preliminary one, and the fresh one is about a joint venture. When D. Sambasiva Rao was holding additional charge of the Industries and Investments Department, he advised the State Government to allow only the APGDC-GDF-Suez-Shell consortium to build the LNG terminal at KDWP and not any private investor.
The government was told that the consortium would complete the task within the deadline of 18 months, but nothing happened during that period and the deadline expired in August 2015.
The new MoU signed in Vijayawada last week, oil and gas analyst M.V.S.R. Kamesham says, gives the consortium another 18 months, starting anew.
“It’s old wine in a new bottle. In my experience of 40 years in the oil and natural gas sector, it’s not easy for government consortiums to go for production during that short period,” said Mr. Kamesam.
The GAIL general manager at Rajahmundry M.V. Iyer said it is lay pipelines through villages. “Village heads and political leaders are not allowing our pipelines to pass through their villages. They demand not only compensation, but also put many other demands. If the collectors and other revenue officials cooperate, the project will go smoothly,” he added.