GAIL's plan to produce natural gas-based power gets nod

GAIL India, the country’s biggest gas marketer, has received its board’s approval for a foray into natural gas-based power generation. It will set up its first power plant at Uran in Maharashtra with an investment of around Rs 800 crore.

“The plant will have a 250-megawatt (Mw) capacity. We are in the process of signing a power purchase agreement with the state power department. Discussion is also on with PTC India to facilitate power trading,” said a senior company official.

Gradually, power projects of similar capacity would also be set up at Vijaipur in Madhya Pradesh, Auraiya in Uttar Pradesh and Gandhar in Gujarat, he said. GAIL India already has land and manpower, among other infrastructures, at these locations, which also have the company’s LPG plants and gas pipeline.

The four plants would require 2.5 million standard cubic metres of gas a day. Due to limited gas availability from domestic sources, the company will have to depend on imported gas for power generation.

Of late, GAIL has been regularly buying and importing spot LNG from various companies like Gazprom, RasGas, BG and Marubeni. Most of the gas is sold to companies in the power and fertiliser sectors that are not getting the entire contracted quantity from Reliance Industries’ KG-D6 gas field. Besides, GAIL is also a promoter of Petronet LNG, the biggest importer of LNG.

With GAIL already a promoter in the erstwhile Dabhol (Maharashtra) project, producing 1,800-1,900 Mw power, the company has decided to enter the sector in a big way. GAIL is also a 12 per cent equity partner in Gujarat State Energy Generation Ltd. GAIL’s total investment in these two ventures is about Rs 1,100 crore.

The company has also ventured into renewable energy generation. A 100-Mw wind power project for Karnataka and Tamil Nadu has received the board nod and is due for completion by March next year. It also aims to set up solar power projects by bidding under the National Solar Mission.