In September last year, the Gujarat government had invited bids for the project, to be tied in with an LNG-based power plant. However, due to issues relating to the structuring of the project, the state government had delayed announcing the award. Two months ago, it asked for additional information on cargo estimates from the bidders. State government sources now say the project will be awarded within a month.

The Mobil RasGas combine had one of the more expensive proposals for the project with a cost estimate at fourth quarter 1997 prices of $1,051 million. Of this, the LNG terminal, which was to be built in the first phase, had an estimated cost of $364 million, the breakwater of $112 million and the dry cargo terminal of $435 million.

The combined estimates were higher than its competitors, but its plans were more ambitious as well. Against a capacity of 5 million tonnes per year for LNG (2.5 million tonnes is the minimum break-even capacity), Mobil-RasGas had planned for 9 million tonnes, with a utilisation of 40 per cent initially. Also included was an LPG terminal with a capacity of 3 million tonnes per year.

With Mobil-RasGas pulling out, the state government is left with a choice of the Reliance-led consortium and the Essar-Shell combine. In the latter case, Essar is a minority partner, expected to pick up a stake only after the project is well under way.

A recent report by the Gujarat Infrastructure Developement Board has, however, raised some doubts over the Hazira greenfield project. According to the report, the feasibility of the Hazira port is contingent on the second phase of the Dahej port project coming up. According to an agreement between the Gujarat Maritime Board and Petronet LNG, which is the promoter of the Dahej facility, the LNG terminal is to be constructed in the first phase and the multi-purpose, multi-user break bulk and container terminals are scheduled for the second phase.

Dahej, thanks to a first mover advantage, could corner the cargo estimated as a potential for Hazira. However, Gujarat government sources say if Petronet is not keen on phase 2 (a very strong possibility since ports is not their core business), then there is good scope for both Hazira and Dahej.

Cargo estimates made by the CES for Hazira are quite promising. By 2001, Hazira could be handling close to 3.9 million tonnes of petrochemicals, 0.2 million tonnes of fertiliser, 1.5 million tonnes of cement clinker, 3.5 million tonnes of LNG, 5.2 million tonnes of iron ore, 1.4 million tonnes of general cargo and 1.8 million tonnes of iron and steel products.