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| Govt doubles supply of RIL's KG gas to Dabhol plant |
| Press Trust of India / New Delhi Sep 17, 2009, 19:56 IST |
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The government has more than doubled the allocation of natural gas from Reliance Industries' (RIL) KG fields to the beleaguered Dabhol power plant, which is likely to begin drawing the fuel from next month.
The government had previously allocated 2.7 million standard cubic meters per day (mmscmd) to Ratnagiri Gas and Power (RGPPL) - the company that runs the Dabhol power plant in Maharashtra — and the same has now been increased to 5.67 mmscmd from October 1.
Petroleum Ministry sources said the allocation has been raised on request of RGPPL, which wanted more gas to increase electricity generation.
RGPPL was allocated 2.7 mmscmd of gas for the period between April and September but the company had not draw even a single unit as it had a running contract with Petronet LNG to buy imported liquefied natural gas.
The contract, sources said, is coming to an end on September 30 and RGPPL would from the every next day start taking KG-D6 gas, a move that will help the company cut down its fuel cost.
RGPPL — co-owned by state power utility NTPC and gas firm GAIL India - was among the three firms which were yet to draw on even a single unit of KG-D6 gas allocation. The others are NTPC, which has not yet signed a Gas Sales Purchase Agreement (GSPA) for its entitlement of 2.67 mmscmd, and Essar Power that is negotiating a transportation agreement.
The Petroleum Ministry in a letter dated September 15 had informed RIL and its minority partner Niko Resources of the increase in allocation and said, "GSPA with RGPPL should be modified suitably."
The delivered cost of RIL's KG-D6 gas to Dabhol would be around $6.5 per million British thermal unit, one-fifth cheaper than what is pays currently.
RGPPL did not take KG-D6 gas previously as it had a 'take- or-pay' contract with Petronet for supply of gas. The delivered price of imported LNG at the Dabhol plant came to around $8 per mmBtu.
Sources said KG-D6 gas would help RGPPL generate about 1,000 Mw of power at lower cost.
RIL can produce 60 mmscmd of gas from KG-D6 fields but is restricting output to just 36-36 mmscmd in absence of offtake from existing customers like RGPPL and NTPC and failure of the government to name consumers beyond the initial 40 mmscmd.
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