The Hindu Business Line : Delay in signing of pact with RIL for Kawas, Gandhar expansions

"GAIL is negotiating with Iran for about 7 mtpa of gas and if they get that then we should be in line to have the gas not only for Kayamkulam but also for other expansion projects," an NTPC official said.

New Delhi , Oct. 17

NTPC Ltd, the country's largest power generator, is looking to state-owned GAIL (India) Ltd to bail it out of the gas shortage at some of its upcoming stations.

This follows the delay in signing of a gas supply agreement with Reliance Industries Ltd (RIL) for NTPC's upcoming Kawas and Gandhar expansion projects.

NTPC, which is in the process of inking a gas agreement with GAIL for its Kayamkulam station, is now negotiating with the gas transporter for sourcing extra fuel to run its upcoming expansion projects, starting with the 1,300-MW Kawas and Gandhar expansion projects, NTPC officials said.

Hinging on GAIL deal with Iran: "We have worked out the heads of agreement with GAIL for the sales supply agreement for Kayamkulam and are exploring possibilities to source more gas. GAIL is negotiating with Iran for about 7 million tonnes per annum (mtpa) of gas and if they get that then we should be in line to have the gas not only for Kayamkulam but also for other expansion projects," an NTPC official said.

Delay from RIL: NTPC had, last year, inked a preliminary gas supply pact with RIL for its Kawas and Gandhar expansion projects, which are due to go on stream in 2007. The signing of the Reliance gas supply deal for the stations is already a year behind schedule and RIL gas for the two expansion projects (coming up around March 2007) would not be available for at least an year after the projects are scheduled to go on stream, Government officials said.

There was further delay in the signing of the final gas supply and purchase agreement since RIL raised a slew of preconditions, including flexibility in pricing and easier penalty norms. With uncertainty gripping the deal with RIL and a near certain delay in supplies on the cards, NTPC is trying to work out alternative fuel arrangements for these new stations.

Alternatives: The NTPC management is also looking at other short-term alternatives to tide over the near certain fuel problem at the Kawas and Gandhar expansion plans, if GAIL is not in a position to provide extra gas.

"We are also working towards arranging some kind of a bridge fuel for roughly about 6-9 months following commissioning of Kawas and Gandhar expansions. The possibility of combining naphtha and gas and use that for commissioning is also being worked upon, even though the cost aspect of using liquid fuel could be a prohibitive factor," an official said.

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