Adani Ports to build LPG handling facility at Gangavaram Port backed by take-or-pay deal with Indian Oil Corp

Adani Ports and Special Economic Zone Ltd (APSEZ) will build liquefied petroleum gas (LPG) handling facilities at Gangavaram Port in Andhra Pradesh and the terminal’s 5 lakh capacity will be fully underwritten by State-run Indian Oil Corporation Ltd (IOCL).

APSEZ said it has signed a memorandum of understanding (MoU) with India’s biggest oil refiner for a takeor-pay contract for building LPG handling facilities at its Gangavaram Port.

APSEZ, the port’s unit of the Adani Group, revealed the plan while announcing the company’s third quarter financial results on 7 February.

India’s biggest private port operator, though, did not disclose the capacity of the terminal nor the investment in the LPG facility in Gangavaram Port which it acquired in 2021 for Rs6,200 crores and merged with APSEZ last year after securing approvals from the National Company Law Tribunals at Ahmedabad and Hyderabad.

A take-or-pay contract means that the oil refiner will have to pay for using the terminal’s full 5 lakh capacity a year even if it ships less than the committed quantity.

Indian Oil Corporation currently uses State-run Visakhapatnam Port, located adjacent to Gangavaram Port, to import LPG.

India’s LPG consumption is forecast to grow to 30.3 mt by 2025 and 40.6 mt by 2040, according to the Ministry of Petroleum and Natural Gas.

On the Western coast, LPG terminals are located at Kandla, Mundra, Dahej, Pipavav, Mumbai, Jawaharlal Nehru Port, and New Mangalore with one more facility coming up at Cochin Port. On the East coast, LPG cargo is handled at Visakhapatnam, Ennore, Paradip, and Haldia ports.

Indian Oil Corporation runs exclusive LPG handling terminals at Ennore near Chennai and Haldia ports with a new facility to start operations soon at Cochin Port.