India’s Essar Ports Ltd is reportedly attempting to strengthen its business by investing in an LNG terminal to diversify its business.
Media reports said that the company is restructuring its business to beat the slowdown in cargo traffic, which has fallen away due to lower import of cargo and restrictions on movement of iron ore, one of its major cargo sources.
The plan is to invest Rs 3,000 crore in setting up a floating storage and regasification unit (FSRU) near Hazira in Gujarat instead of a conventional LNG terminal on land.
Essar Ports is one of the largest private port companies in India with a current capacity of 140 million tonnes . The plan is to increase this capacity will be expanded to 194 million tonnes over the next few years.
It has five operational port terminals at Hazira, Vadinar, Paradip, Salaya and Vizag and handled approximately 90 million tonnes of cargo during FY17.
To turn the business around Essar Ports also wants to increase third part contracts at the terminal up to 35% in the coming years, up from 11%.
It will do this through the support of group companies. For instance, Essar Oil Ltd has guaranteed volumes at the Vadinar terminal for 43 MMT in financial year 2017 going up to 49.3 MMT in financial year 2021.
At the Hazira terminal, Essar Steel Ltd has guaranteed volumes of 23.75 MMT a year.
