RIL counters govt assertion on idle power plants

Reliance Industries has countered government's assertion that power plants were lying idle due to fall in output from its KG-D6 fields, saying most of these units were built much before the fields were even discovered.
Sources close to the company said none of the 31 idle power plants that were stated as being dependent on gas supplies from RIL, were installed or financed on the basis of KG-D6 gas.
Yesterday, the government had while announcing a scheme to make imported gas (LNG) affordable for the 31 power plants said that "due to sharp decline in KG-D6 gas production not only could gas not be allocated to new gas based projects, but the commissioned capacity that KG-D6 gas allocation also get stranded."

"A large number of gas based plants were set up by power developers, some with firm allocation and others with expected allocation. However, the supply of domestic gas to power plants started declining since 2012 and completely stopped from the KG basin, in March 2013. Since then, these plants have either not been operating at all or are being under-utilized," an official statement had said yesterday.
Sources said almost all of these plants came up and were financed by lending institutions, based on specific alternative allocations/supply sources much before the KG-D6 block had even acquired a development plan.
These plants were built on promise of gas from ONGC, Cairn, GSPC-Niko or BG-operated PMT fields, they said.

Sources said the company had on August 24, 2013 written to the Power Ministry to set the record straight.

The letter by RIL Executive Director P M S Prasad had stated that the in most cases, the stipulated gas supplies not materialising or other fuels being found to be too expensive, allocations of KG-D6 gas were made by way of substitution in 2008.
Of the 31 power plants with a total 14,305 MW capacity, 20 with combined capacity of 9,100 MW had been commissioned even before RIL gas discovery in KG-D6 block in 2002. Another 300 MW got commissioned in 2003.

Further, out of the remaining 4,600 MW, 3,800 MW was installed or was under construction before 2005. "All these plants had allocations as well as specific fuel supply agreements on the basis of APM gas, gas from domestic sources other than KG-D6 or LNG," RIL had written.
With water and sand ingress shutting down half of wells on KG-D6 fields, gas production has dropped dramatically and power plants, which are third in priority list for receipt of gas, are not being supplied any fuel since March, 2013.