Karnataka scouts for gas, to set up LNG terminal

The Karnataka government is looking at entering into preliminary agreements with gas suppliers for its proposed 2,800 Mw of gas-based power generation capacities at the upcoming investors' meet in June.

To meet its gas demand, the state government will invite companies to set up liquefied natural gas (LNG) terminal. The government has also identified land for the project. “Land has been identified at Tadadi in north of Mangalore for the LNG terminal. The terminal can begin with a capacity of 2.5 million tonnes (mt) and expanded later,” said D N Narasimha Raju, principal secretary, department of energy, Karnataka. He was speaking at the sidelines of the 7th Asia Gas Partnership Summit here.

M Naveen Kumar, managing director, Power Company of Karnataka Ltd, said, “We are looking at signing MoU (memorandum of understanding) with gas suppliers during the investors meet.” He said the state government proposes four gas-based power plants of 700 Mw each at Belgaum, Gadag, Davangere and Tumkur, under Case 2 competitive bidding routes, along the upcoming 800-km Dabhol-Bangalore gas pipeline being built by GAIL.

Under Case 2 route, land, water and other facilities are arranged by the government and the project is bid out to a private player through a process of tariff competitive bidding.

“The projects will be finalised depending on the procuring price of natural gas,” he said, adding the ideal price the state government is looking at is $8 per mBtu for developing these projects.

Kumar said the state government has already contracted for off-taking gas from the Dabhol-Bangalore pipeline for a 700 Mw plant at Bidadi, which will be imported in the form of liquefied natural gas at the Dabhol terminal.

The Karnataka cabinet had last year approved sourcing LNG from the spot market to encash on the price advantage it enjoys over long-term contracts.