Centre issues tender for gas-fired power to address high electricity demand

By Sudarshan Varadhan

SINGAPORE (Reuters) -India is seeking bids to supply gas-fired power to address expected periods of unusually high electricity consumption in October and November, a tender issued on Thursday showed.

Domestic gas plant operators are likely to bid for the tender, potentially pushing them to tap the spot liquefied natural gas (LNG) market at a time of tepid Asian demand.

India relies on coal to generate nearly three quarters of its electricity, and power generated from coal is typically much cheaper than when generated by gas-fired plants. Over half of the country's roughly 25 gigawatts (GW) of gas-fired capacity is non-operational because of relatively high LNG prices.

However, the worst power shortages in 16 months due to an unexpected surge in power demand due to factors including higher than usual temperatures, and a sharp plunge in hydroelectricity output, have forced the world's fifth largest economy to turn to gas-fired power.

"The operation of gas-based plants is envisaged tentatively for 20 days during the crunch period, extendable by another five days based on requirement," a tender issued by a unit of state-run NTPC Ltd said.

India is seeking bids to supply 4,000 megawatts (MW) of electricity from gas-fired power plants to address high demand in October and November, according to the tender.

The tender includes a minimum guaranteed purchase of 75% of the contracted quantity.

As India's consumption of natural gas exceeds its domestic production, and most of its locally produced gas is used by other industries, gas plant operators need to buy LNG in the spot market.

It is unusual for India's electricity use to spike during the second half of the year as temperatures typically fall. Demand tends to peaks in May, when Indians crank up air-conditioners to beat the heat, and industries operate without rain-related disruptions.

India has been pushing utilities to expedite completion of power plant maintenance and hasten the process of starting completed projects, as part of emergency steps to stop electricity outages.

(Reporting by Sudarshan VaradhanEditing by Jason Neely and Susan Fenton)