The Hindu Business Line : Gail plans to expand pipeline network to meet IPPs demand in AP

WITH new independent power producers (IPPs) in a quandary over fuel supply linkages, Gail (India) Ltd has sewn up plans to expand its pipeline infrastructure to support gas-fired plants in Andhra Pradesh.

Mr R.C. Arora, a Zonal Official of Gail, told Business Line that there has been change in the Government policy in terms of gas supply to new projects. Earlier, supply to new IPPs meant that the gas should be supplied through a new pipeline. But with certain changes made lately, Gail can now offer them gas providing last mile linkages from existing pipeline.

"Though there would be pipeline, it does not mean that Gail would be able to meet the entire requirements of new power projects. These projects would be able to test run their plants and provided additional gas.

However, they could get fuel from alternative sources. It is likely that these plants would be able to achieve commercial production by either December 2005 or early 2006. Gail expects to meet their entire requirements by middle of 2006 from new sources of ONGC and Ravva oil fields," Mr Arora said.

With Gail completing these new pipelines, its gas carrying capacity would increase from existing level of 14 million metric standard cubic meters per day (MMSCMD) to around 16 MMSCMD.

The Gail is in dialogue with ONGC as well as joint venture operators in Ravva fields to step up their production from the existing sources so as to tide over the tight supply situation for IPPs in Andhra Pradesh.

Since Gail does not have any source of its own currently in the K-G basin and for the gas supplied by Gail, it is dependent on the producers of the gas in the region.

While the Gas Linkage Committee (GLC) had allocated 9.5 MMSCMD for IPPs, there is 17 per cent shortage in the last two years. This has forced Gail to allocate gas on a pro rata basis among all consumers having a firm allocation in line with the decision taken by the Petroleum and Natural Gas Ministry.

With regard to natural gas supply to four IPPs - GVK, Spectrum, Lanco and Reliance Energy - as against the total contracted quantity of 3.9 MMSCMD, 3.62 was allocated during 2004-05, about 93 per cent of the contracted quantity.

For new IPPs, four of them, which would go on stream from July 2005 (in a phased manner), the combined allocation has been 6.7 MMSCMD. Consequently, the total requirement in the region would go up to 16 MMSCMD, as against the current allocation of 9.5 MMSCMD.

Given the demand-supply mismatch in the Krishna-Godavari basin, Gail had proposed an LNG (liquefied natural gas terminal) at Kakinada. However, this project has not take off, leading to problems for the IPPs.

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