Karnataka govt talks to HPCL, GAIL to supply gas

The Karnataka government is in talks with Indian and international energy companies to arrange gas for three power plants for which it is planning to seek bids. Currently, it is in talks with GAIL India and Hindustan Petroleum Corporation Ltd (HPCL) to procure about 26 mmscmd for a total gas capacity of 2,100 Mw.

According to a person close to the development, after the government ties up the gas, it would approach private power producers to bid for these three power plants. Neither HPCL nor GAIL responded to e-mailed queries.

The state government made failed attempts to seek bids for three power plants at Davangere, Gadag and Belgaum in 2010,. Each of these power plants have a capacity of 700 Mw each, and entail a project cost of Rs 3,500 crore. However, private power producers had expressed concerns on their ability to procure gas by themselves.

When these projects were initially planned, they expected at least some of the gas required to run these projects would come from domestic sources. However, it shifted to complete imported gas or liquefied natural gas (LNG) after the domestic gas situation in the country became lean as RIL's D6 block's production, in Krishna Godavari district dropped.

The expression of interest (EoI) was called for these projects and Request for Qualifications (RFQ) were issued, but players asked the state government to get a fuel linkage in place. After the gas linkage is secured, the power producers will bid only on the tariff.

“If we tie-up gas for these projects, then there would be more interested parties,” said a state government official under the condition of anonymity. The state government, which is going on an global investor meet in June, is also planning to engage in talks with United Arab Emirates based gas suppliers for these projects as well.

“We will have clarity on the actual bidding date of these power projects after June,” said the official. After the contracts for the supply of liquefied natural gas (LNG) are finalised, the state government will also work on setting up an LNG terminal at Tadadi port in North Karnataka. This is however still in the planning stage. Tadadi port itself is in the bidding stage and involves a project cost of Rs 3,800 crore.

Reviving these three power projects is a part of the state government's plan to infuse private capital into infrastructure development in the state.

The Infrastructure Development Department (IDD) has planned to seek private participation for 207 projects, involving a total investment of around two lakh crores.

Around 145 projects are currently in the pre-feasibility stages where studies are being conducted on the viability. The rest of them are under various stages of bidding, project development and bid preparation. The projects cut across various areas of infrastructure from ports, logistics parks, warehouses, highways, hospitals, and water infrastructure projects.