Economy

Imported gas to meet AP power plants' deficit needs

Our Bureau New Delhi | Updated on March 17, 2011 Published on March 17, 2011

Minister for Petroleum and Natural Gas, Mr. Jaipal Reddy with Secretary Mr. S. Sundreshan and CMD, GAIL, Mr. B. C. Tripathi addressing a press conference after an agreement signed between GAIL, RIL, RGTIL and Power Plants in Andhra Pradesh for additional gas supply to the power projects in Andhra Pradesh. Photo: Ramesh Sharma



GAIL (India) Ltd, Reliance Industries Ltd (RIL), Reliance Gas Transportation Infrastructure Ltd (RGTIL), and power plants in Andhra Pradesh have agreed to swap Krishna Godavari Basin D6 gas with imported gas.

This will enable supply of additional 2.594 mscmd gas to power plants in Andhra Pradesh leading to increased power production of almost 600 MW (12 million units per day). An agreement was signed here on Thursday between GAIL, RIL, RGTIL and the power plants in the State.

The State Government had communicated that power plants in Andhra Pradesh are suffering certain deficit of natural gas for optimum power generation, the Petroleum Minister, Mr S. Jaipal Reddy said, adding that, “the State Government needs to increase power generation from its gas-based IPPs to meet the summer demand till May 2011.”

To meet this requirement, the State wanted to use R-LNG, he added. However, Andhra Pradesh does not have connectivity to an LNG plant and also R-LNG from plants located in Gujarat cannot flow from West to East against KG D6 flow from East to West. “Swapping of R-LNG with GAIL's KG D6 allocation has been considered. This involves diversion of D6 gas from GAIL's LPG plants to IPPs in Andhra Pradesh and compensating equivalent quantity of R-LNG procured by IPPs through GAIL,” Mr Reddy said.

Pricing

As regards pricing of the gas, the AP DISCOMs are willing to pay, apart from the cost of R-LNG, requisite costs such as marketing margin, transportation charges, inter-State and intra-State taxes, whichever will be applicable, on account of the proposed swapping. The price of D6 gas is $4.2/mBtu (at landfall point), R-LNG is priced at about $10/mBtu.

Andhra Pradesh has been given high priority in allocation of gas being produced from RIL operated KG D6 fields, especially the power plants. The Minister said that 13 existing gas-based power plants in Andhra Pradesh have been allocated 9.64 mscmd of D6 gas, which has led to additional power generation of around 2,000 MW. Four power plants, which had been stranded for lack of gas, have become operational after commencement D6 production.

“Apart from ensuring additional supply of gas to customers in Andhra Pradesh, the arrangement would also form the basis for supplying RLNG to new areas in the country, not connected to LNG terminals,” Mr Reddy added.

“Generation of the electricity through gas would result in savings of approximately Rs 250 crore to the State as compared to generation from naphtha,” he said.

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Published on March 17, 2011
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