Lanco may go slow on expansion of its gas-based plant in Andhra

Lanco Infratech Ltd. | Engineering - Construction | Construction & Infrastructure | BSE: 532778 | NSE: LITL

20 Jun 2011 Evaluate

Lanco Infratech may go slow on expansion of its gas-based power plant in Andhra Pradesh as shortage of domestic gas supply to the plant has led to a drop in its capacity utilization. The plant load factor (PLF), which measures capacity utilization, at its Kondapalli unit in Andhra Pradesh, has come down to 75-80 per cent from 90 per cent. The plant depends on gas supplied by Reliance Industries from the Krishna Godavari (KG) D6 block.

Lanco project is among the top six in the government's list for consideration for gas allocation and the company is awaiting clarity on that. The company plan to change its plans for adding capacity through gas-based plants if the problem of gas shortage persists. Lanco has 740 Mw of operational capacity based on gas and plans to add another 740Mw. Reliance Industries is now pumping about 50 million standard cubic meters a day (mscmd) from its KG-D6 block, less than the 60 mscmd it produced last year. Though there is an alternate, LNG (liquefied natural gas), it will increase the tariffs.

In accordance with the government gas utilization policy, Reliance has signed up customers for 60.76 mscmd of gas, while production is less than 48 mscmd. The government had accorded highest priority to fertilizer plants followed by LPG extraction units, power plants and city gas distribution projects in allocating KG-D6 gas.