Financial Daily from THE HINDU group of publications
Thursday, Sep 16, 2004
Alliances & Joint Ventures
Long-term gas supply Wartsila in talks with GAIL, GSPC
Mumbai , Sept. 15
WARTSILA India, makers of diesel-fired power generating sets is in talks with GAIL India and Gujarat State Petroleum Corporation for long-term natural gas supply.
Rising international oil prices, coupled with improving natural gas supplies within India has prompted Wartsila, majormanufacturer and supplier of 1 MW - 6 MW DG sets, to focus on setting up gas-fired captive power plants for its customers, according to Mr Banmali Agrawala, Managing Director.
"Our growth will essentially come from natural gas (-based power projects). We are in talks with GAIL India for roughly 3 lakh cubic metres per day gas supplies to two upcoming projects of around 30 MW each that we are developing for our customers in Madhya Pradesh, and a similar quantity from GSPC for projects on the west coast," Mr Agrawala told Business Line.
According to Mr Agrawala, the Electricity Act, 2003 has allowed industries more freedom to set up captive generation.
Industries that were forced to pay high tariff of between Rs 3 and 5 per unit to help the State electricity boards cross-subsidise rural customers can now set up captive plants and also sell power to other users in the vicinity.
At the same time, improved availability of natural gas, which is cheaper than other liquid fuels including naphtha and furnace oil, has led to more industries looking at gas-based power projects. This would bring down generation costs to Rs 2.15 paise per unit, he said.
The Rs 282-crore company has recently picked up a minority stake in two power projects namely Kaveri Gas Power Ltd and the Tamil Nadu-based OPG Energy Pvt Ltd.
" Although we do only EPC work for power projects, Wartsila decided to pick up minority stake in both these power projects to convince lenders of the viability of these projects. The company may later sell out its share in Kaveri and OPG Energy as it is not our core business," Mr Agrawala said.
Wartsila also hopes to double the turnover of its shipping division, which manufactures equipment such as propellers, engines, gearboxes, etc., in the next two-three years. The company earned close to 20 million euros from its Indian shipping business last year.
Wartsila India provides engines, equipment, operation and lifetime care services for captive projects and is a 100-per cent subsidiary of Finnish major, Wartsila.
The company has set up close to 500 MW out of the 2,800 MW captive power capacities in India.
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