Petronet LNG Ltd plans to set up a floating LNG terminal in Andaman and Nicobar Islands which will be utilised to feed city gas distribution business of selling CNG to automobiles and piped cooking gas to households in the island. Petronet has made an application to sector regulator, Petroleum and Natural Gas Regulatory Board (PNGRB) for a city gas licence. In its application it said, NTPC Vidyut Vyapar Nigam Ltd is looking at setting up a 50 MW gas-based power plant in Hope Town in South Andaman and plans to appoint a gas supplier for the same. "Petronet (has) proposed to set up an Floating Storage Regasification Unit (FSRU) to regasify LNG to supply gas to the power plant. This would (also) be the source for the supply of gas to city gas distribution (CGD) network at Port Blair," the company said in the application.

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Gas will be imported in its liquid form (LNG or liquefied natural gas) from international suppliers. It will be converted back into its gaseous state at a FSRU at the high-sea. "Gas shall be sourced from long term or spot LNG market," Petronet said. The company currently operates a 15 million tonnes a year LNG import terminal at Dahej in Gujarat and has another 5 million tonnes a year unit at Kochi in Kerala. Petronet said Port Blair has a population of around 1.5 lakh made up to some 39,000 households. Port Blair has 1.2 lakh vehicles with majority 86,402 being two-wheelers.

Petronet assessed the city's gas demand by 2027 at 0.077 million standard cubic meters per day, more than half of which will come from the use of CNG in transport. Household demand was put at 0.015 mmscmd and an almost similar consumption from commercial establishments. The geographical area for its city gas network at Port Blair will span some 50 square kilometers, according to the application. PNGRB has sought comments on the application made by Petronet by June 6. It may allot the city gas licence to the company if there is no competitive offer for setting up a CGD network on the Islands.

In case there are offers, the applicants as also Petronet would be asked to make a bid for the licence. According to Petronet, the FSRU will have the capacity to import 0.15 million tonnes per annum. Andaman & Nicobar islands currently meets its power needs mainly from Government owned diesel generation units with balance power purchased from independent power producers such as Surya Chakra Power Corporation Ltd at Bamboo flats and other Hired Power plants at Phoenix Bay.

Gas being environment-friendly fuel will help the ecology of the Island. The planned 50 MW power plant by NTPC will be sufficient to meet current as well as future electricity needs of Andaman and Nicobar Islands. The proposed LNG terminal will cost about Rs 496 crores while the power plant may cost about Rs 215 crore.