Establishing A Floating Storage Re-Gasification Unit

India is witnessing a rapid growth in the demand for Liquefied Natural Gas (LNG). This supports Government plans to double the share provided by LNG in the countries energy mix in the near future. As domestic production is inadequate to meet the increasing demand, India needs to import LNG. This means a need to deliver FSRUs within port limits as well as the related infrastructure.

In the absence of specific guidelines, the Indian Port Association (IPA) has examined the issues related to FSRU within port limits and submitted a report in September 2018.

The following guidelines for the establishment of FSRUs with the limits of our Major Ports are proposed:

• Any entity may setup an FSRU, but all related expenses will be borne by the entity. The entity will have to submit a pre-feasibility report that shall be examined by the Port before it is given the required permission
• A transparent bidding procedure will be adopted and the Land License Model will be followed. The project entity will retain all rights to the project assets and is free to take these away at no costs at the end of the lease period
• License Fee for the Water Area will be calculated as 50% of the Land Fee applicable on the abutting land; this will be the Reserve Price for the bid
• The License will be for a period of 30 years but with the approval of the Ministry of Shipping (MoS) a longer lease period can be secured

Bidding Process Guidelines

• Single Stage e-Tendering system
• Bid documents inclusive of Draft License Agreement
• Bidders to quote premium over the Reserve Price payable to the Port; the entire License Rental for the lease period is payable upfront
• Solvency certificate for an amount equivalent to the Total License Rental to be provided
• Bid security of INR 2 crore
• Performance Guarantee in the form of a Bank Guarantee for an amount equivalent to 10% of the project cost limited to a maximum of INR 50 crore, which will be forfeited if project is not completed within the stipulated period
• An additional Bank Guarantee equalling 10% of the Total Upfront Premium must be provided to meet security and other operational requirements
• After five years from the COD, an MGT equalling 30% of the Project Capacity will be prescribed
• The License may be terminated in case of default for three consecutive years

General conditions

• Project entity to procure all necessary permissions
• Project scope includes discharge of LNG, re-gasification, storage, and supply/transportation to the importers
• The project entity will pay port dues, pilotage, wharfage, and berth hire as per the prevailing SOR
• Adequate third-party/public liability insurance to be procured
• Project should comply with “The Petroleum and Natural Gas Regulatory Board Regulations 2018”
• At the end of the lease period, licensee will hand over peaceful possession free from all encumbrances within 90 days