Revealed! How Adani Group self-financed Dhamra LNG import facility

In a remarkable demonstration of financial independence and strategic planning, the Adani Group has constructed the Dhamra LNG import facility in Odisha entirely through promoter backing, without relying on the financial undertakings or guarantees of public sector behemoths like Indian Oil Corporation (IOC) and GAIL. This approach, reported by NDTV citing undisclosed sources, represents a significant shift in the financing of large-scale energy projects in India, positioning the Adani Group as a key player in the country’s energy independence.

Breaking the Norm: Dhamra’s Unique Financing Structure

The groundbreaking decision by the Adani Group to finance the ₹ 6,450 crore Dhamra LNG terminal project through equity and debt without any financial input from IOC and GAIL is a testament to the group’s robust financial muscle and vision. Sources close to the development revealed that despite allegations by Trinamool Congress MP Mahua Moitra, no upfront payments, cash, or bank guarantees were required from IOC and GAIL during the project’s inception or execution phases. This strategy not only underscores Adani Group’s commitment to energy sector advancement but also sets a new precedent in project financing dynamics.

Competitive Edge: Dhamra vs. Dahej and Ennore

The tariff and commercial terms of the Dhamra LNG terminal, inclusive of port charges, were determined through competitive benchmarking against Petronet LNG’s Dahej terminal in Gujarat. Significantly, the Dhamra terminal’s tariff is reported to be 1.5% lower than Dahej, promising an annual savings of ₹ 21 crore over 4.5 million tonnes of LNG capacity usage. This pricing strategy, contrasting with the higher regasification charges at Ennore LNG terminal in Tamil Nadu, places the Dhamra terminal in a favorable position in the market, enhancing its appeal to major players like IOC and GAIL.

Strategic Choices by IOC and GAIL: Beyond Equity Investment

The strategic decision by IOC and GAIL to not take an equity stake in the Dhamra terminal, despite an initial ‘non-binding’ agreement, reflects a nuanced approach towards investment and operational flexibility. By opting to book capacity at Dhamra, both companies efficiently circumvented the need for direct investment, leveraging the competitive pipeline tariff and the advantageous location of the terminal to serve nearby consumption centers. This decision aligns with their broader strategic goals, maximizing the economic and operational benefits without the commitment of equity.

The Competitive Landscape: H-Energy’s Challenges in the LNG Market

The Dhamra LNG terminal’s emergence also impacted the competitive landscape, as highlighted by the challenges faced by Hiranandani’s H-Energy. Despite obtaining a NOC from the Kolkata Port Trust for setting up an LNG terminal in Kukrahati, H-Energy struggled to advance the project. Their inability to present a value proposition superior to that offered by Dhamra LNG to major players like IOC and GAIL signifies the competitive and dynamic nature of India’s LNG market.

Conclusion: Adani Group’s Strategic Foresight

The Adani Group’s approach in developing the Dhamra LNG terminal — self-financed, competitively priced, and strategically positioned — exemplifies the group’s foresight and commitment to strengthening India’s energy infrastructure. With significant pre-investments and the confidence of key industry players, the project not only marks a milestone in the Adani Group’s journey but also in the evolution of India’s energy sector.