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Naphtha imports have seen a progressive increase since late last year as the power developers grapple with a drop in natural gas output from the country's biggest gas fields in the East Coast.
In February, the imports surged over 80 per cent year-on-year to 186,000 tonnes.
According to an official source, “this could easily go up to around 200,000 tonnes once the actual private imports data are factored in”.
Gas supply
Since November, naphtha imports have consistently been in this range almost corresponding with the decline in output from Reliance Industries Ltd (RIL)-operated D6 gas fields in the Krishna-Godavari Basin.
This shortage has also prompted the gas-based power plants, especially in Andhra Pradesh, to buy expensive imported gas (LNG) to meet the electricity demands, amid a sharp spike in spot electricity prices in the Southern Grid to Rs 10-12/unit over the last couple of months, a senior Government official said.
Power generation
“The spurt in spot electricity prices in the southern grid has ensured that liquid fuel (naphtha)-based generation is economically viable till the time that there are takers for power beyond Rs 10/unit. The impending elections have ensured that demand for power should continue at least for a month or two,” he told Business Line .
Gas-based units in Andhra Pradesh and Tamil Nadu, which have cut back generation on account of fuel shortages include GVK's Jegurupadu and Gautami plants, GMR's Vemagiri plant and Lanco Infratech's Kondapalli station.
LNG swap
Amid the shortfall in gas availability, GAIL (India) Ltd, Reliance Industries Ltd (RIL), Reliance Gas Transportation Infrastructure Ltd (RGTIL), and power plants in Andhra Pradesh in mid-March agreed to swap D6 gas with LNG.
This will enable supply of additional 2.594 mscmd gas to plants in Andhra Pradesh, which could translate into increased power production of almost 600 MW (12 million units a day).
The price of D6 gas is $4.2/mBtu (at landfall point), R-LNG is priced at about $10/mBtu (at the landfall point), while naphtha is in the range of $880-890/tonne (excluding the levies).
The State Government had communicated to the Petroleum and Natural Gas Ministry that power plants in Andhra Pradesh are suffering certain deficit of natural gas for optimum power generation and the State needs to increase power generation from its gas-based IPPs to meet the summer demand till May. For this, the power producers were willing to buy imported gas.
Andhra Pradesh has been given high priority in allocation of gas being produced from RIL-operated KG D6 fields, especially the power plants.
The 13 existing gas-based power plants in the State 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 of D6 production.
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