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

Private infrastructure and power company 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 utilisation.

The plant load factor (PLF), which measures capacity utilsation, at its Kondapalli unit in Andhra Pradesh, has come down to 75-80 per cent from 90 per cent, the company’s Managing Director G Venkatesh Babu said.

The plant depends on gas supplied by Reliance Industries from the Krishna Godavari (KG) D6 block.

When asked if the company will stop adding capacity through gas-based plants, Babu said, “Our project is among the top six in the government's list for consideration for gas allocation and we are awaiting clarity on that. We might change our 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 metres 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, he said. “Our plant is connected to the pipeline. But logistics will have to be worked out for supply of LNG,” he said.

After output from the country’s biggest gas producing block, KG-D6, dropped 20 per cent, the ministry of petroleum and natural gas had directed RIL in March to first meet the demand of priority sectors such as fertiliser and power, and in case any gas is left, it should be supplied to the non-priority sectors such as steel, petrochemicals and refineries on a pro-rata basis.

In accordance with the government gas utilisation 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 fertiliser plants followed by LPG extraction units, power plants and city gas distribution projects in allocating KG-D6 gas.