The Hindu Business Line : LNG supply: TNEB to invite expressions of interest

THE Tamil Nadu Electricity Board (TNEB) plans to invite expressions of interest for supplying liquefied natural gas (LNG) to it for setting up gas-based power plants.

The members of the electricity board are likely to meet in the first week of September to consider this proposal.

According to reliable sources, the board is looking to set up gas-based power plant either in one location or in a couple of places, and is considering going up to 3,000 MW of generating capacity using gas as fuel.

The TNEB's proposal to invite expressions of invite for supplying LNG to it comes in the backdrop of the State's plan to add at least 4,000 MW of generating capacity on its own over the next five to six years.

The board, according to the sources, has felt the need to have a mix of generating sources, considering the shortage it is facing in sourcing coal for its coal-fired plants. The boilers have been designed for domestic coal, which has high ash content and low calorific value, while imported coal has low ash content and high calorific value. The board has been using coal imported by MMTC, a Central Government undertaking, and blending it with domestic coal for its thermal plants.

According to the sources, TNEB is likely to guarantee an offtake of 80 per cent of the installed capacity of the LNG terminal on take or pay basis. The TNEB is looking at an LNG terminal and a regassification facility of 3 million tonnes.

It may be recalled that the Tamil Nadu Government had awarded a tender in December 1998, after inviting global bids, to a consortium comprising the Aditya Birla group, Unocal and CMS Energy of the US, Woodside Petroleum of Australia and Siemens of Germany for building a 2.5-million tonnes a year LNG terminal and a 1,850-MW power plant. As per the bidding documents, the project was to achieve financial closure by December 2000 and full operational status by 2003. The project, however, got stuck in finalising an adequate payment security mechanism and has not made any progress at all.

In the meantime, Indian Oil Corporation and its subsidiary, Chennai Petroleum Corporation Ltd, have proposed an LNG terminal at Ennore, on the northern outskirts of Chennai, with a capacity of 2.5 million tonnes, which could be expanded to 5 million tonnes. IOC had also said that it had tied up with the Hinduja group to source gas from Iran.

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