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NTPC, RIL join hands to ease Andhra power woes

13 Apr 2011 Evaluate

NTPC and Reliance Industries (RIL) will soon enter into a complex deal to ensure supply of more gas to Andhra Pradesh power projects. Gas marketer and transporter GAIL, too, will be a part of the arrangement. The deal will involve NTPC power plants in North India getting regasified liquefied natural gas (RNLG) through the GAIL pipeline, while its quota of gas from RIL’s D6 block off the east coast will be supplied to Andhra power plants.

NTPC and GAIL get gas from the D6 block. While NTPC uses the gas for its power plants in North India, the government has allotted GAIL gas for its petrochemical plant at Pata in Uttar Pradesh. Since there is no regasification terminal on the east coast, Andhra power plants’ access to gas is limited to domestic sources, including D6. This creates a shortage, especially as production from D6 has fallen to less than 50 million standard cubic metre a day (mscmd) from 62 mscmd in March 2010.The swapping will be for the volume that is actually supplied. This will optimize use of pipelines as D6 gas will not need to travel from east to west and RLNG from west to east.

Though RIL was reluctant to enter into such an arrangement in view of its dispute with the UP government on taxation, the change of guard at the petroleum ministry has helped. Minister Jaipal Reddy belongs to Andhra Pradesh. This will be the second such arrangement for .RIL It signed a similar deal with GAIL last month for swapping gas from D6 with RLNG. NTPC has so far managed to sign gas sales and purchase agreement for 2.29 mscmd with RIL, though it has been allotted 4.46 mscmd gas. At present, the biggest power producer in the country is using D6 gas at Faridabad and Dadri. With Andhra Pradesh power producers set to get 2.29 mscmd additional gas, about 600 Mw more will be generated this summer. Interestingly, the deal will be signed even as NTPC is fighting with RIL over the ‘take or pay’ liability for supplying additional D6 gas.crackcrack

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