The Hindu Business Line : AP seeks Centre's help for gas supplies

FACED with the possibility of shelling out about Rs 1,200 crore to four independent power producers (IPPs) in the State, set to go on stream by the end of this year, the Andhra Pradesh Government is now looking for the Centre's support to bail it out.

Addressing a press conference here today after his visit to New Delhi to attend the National Development Council meeting and Inter-State Council meeting, Chief Minister Dr Y.S. Rajashekhara Reddy said that the issue of gas supply to the IPPs was taken up with the Prime Minister, who agreed to help the State Government.

The IPPs of GVK, Spectrum, Konaseema and Gauthami are set to go on stream by the end of the year but with the prospect of a gas supply shortage, which GAIL would not be able to provide. In fact, due to the Prime Minister's intervention, the ONGC has stepped up activity in the State to tap more gas, he said.

The Government is also exploring the possibility of bringing in a barge-mounted gas terminal so that the interim period could be supported through imported fuels. Given the agreements with the IPPs, the Government needs to ensure fuel supply or face the prospect of shelling out Rs 1,200 crore, he said.

When asked about the possibility of reviewing the power purchase agreements with the IPPs, Dr Reddy said, "All possibilities are being explored. The legal advice received showed that there is binding affect to these contracts. However, we continue to explore other options."

Referring to the recent announcement by the Gujarat Chief Minister, Mr Narendra Modi, about a major gas find along the AP coast, he said that based on representation, the Twelfth Finance Commission has agreed to some mechanism wherein both Centre and States could get some royalty from such projects to the States where these projects are located. This is based on the assumption that these explorations need support infrastructure from the nearby shores. The State plans to hold negotiations with the Gujarat Government to ensure that some of the power projects receive gas from their fields.

The State Government is also contemplating creating a separate corporation that would lay gas pipelines across the State and supply gas to both domestic and industrial users. The proposal is at its early stages. "However, to start with, we may consider laying a pipeline with an investment of Rs 500 crore to support the priority industries in the State," he said.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page