The Deendayal Port Authority and Assam Petro-Chemicals are building an e-methanol facility in Kandla to supply green fuel to international ships. With a Rs 2,300 crore investment, the project aims to start production by 2027. Investors may follow the execution timeline and the adoption of alternative fuels in global maritime trade to gauge the long-term impact on the sector.
The Deendayal Port Authority (DPA) and Assam Petro-Chemicals Ltd have announced plans to establish India's first port-based e-methanol facility at Kandla in Gujarat. The project, requiring a total investment of Rs 2,300 crore, represents a strategic move to position India as a key supplier of green marine fuel for international shipping routes. E-methanol is considered a cleaner alternative to conventional marine fuels, aligning with global efforts to reduce carbon emissions in the maritime industry.
Project Timeline and Investment
The development will be executed in two distinct phases. The first phase, involving an investment of Rs 1,200 crore, is targeted for completion by January 2027, with a production capacity of 50 tonnes per day. A secondary phase, requiring an additional Rs 1,100 crore, will add 100 tonnes of daily capacity, scheduled for completion by March 2027. The Deendayal Port Authority will hold a 76 percent stake in the venture, contributing essential assets such as land, water resources, and existing green energy infrastructure to facilitate the production process.
Market Position and Economic Strategy
The initiative targets the international shipping market, particularly vessels operating on the Asia-Europe trade corridor. A key advantage highlighted by the project developers is the production cost of e-methanol, estimated at approximately $750 per tonne, which is significantly lower than current global market rates of around $1,300 per tonne. This cost efficiency is intended to make the fuel attractive to global shipping lines looking for cost-effective decarbonization solutions. Beyond the energy production aspect, the project is expected to generate over 3,500 direct and indirect jobs, contributing to regional industrial growth.
Risks and Future Monitorables
While the project aligns with India’s long-term net-zero goals, successful implementation will depend on several factors. The primary risk for such infrastructure projects is execution, including the timely commissioning of the two production phases. Additionally, the viability of the facility rests on the global demand for e-methanol as a shipping fuel and the company's ability to maintain competitive production costs against potential global rivals.
Investors may track the project's construction progress, the ability of the partners to manage capital spending efficiently, and broader developments in the international green shipping fuel market. The company’s success in securing long-term supply agreements with global shipping companies will also be an important indicator of the project's long-term sustainability.