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Gas supply shortage short-circuits power output

Jitendra Kumar Gupta  |  Mumbai 

The problem is impacting capacity addition targets, as firms hold back or postpone earlier plans.

Isaac GeorgeThe is a growing problem for India’s Not only is the plant load factor (PLF) of power plants declining, but the shortage is also spreading a cloud over the of

indicates the utilisation of a plant’s generation capacity. In recent months, this has been falling for gas-based power plants. In August, the fall was to 59.4 per cent as against the peak of 77 per cent in April last year (and 67 per cent in April this year), due to the lack of gas (see chart). "It is also not viable for to procure gas from the spot market in the present scenario, where the (power) tariffs are already lower. For gas-based plants, the difference is Rs 1-1.5 per unit in cost, compared to coal," says Rabindra Nath Nayak, senior analyst at

There is, for instance, the cut in production from Reliance Industries’ D6 gas field in the Krishna-Godvari basin (KG-D6). The output has fallen from a peak of 60 million standard cubic meters per day (mscmd) to about 45 mscmd.

“Gas supply to the has been dismal. The sector received an average supply of less than 75 per cent of the requirement of 82 mscmd (at 90 per cent PLF),” says who tracks the at Of India's installed power generation capacity of 1,73,000 Mw, about 18,000 mw is gas-based. The shortage meant a loss in power generation worth 3,200 mw in August.

Among seeing a decline in their gas-based are GMR and GVK. These are large players, with almost the entire capacity based on gas. Their was significantly hit in August. “If the gas is not available, what can we do? The fuel risk is with the company,” says Isaac George, chief financial officer, GVK Group. Inability to deal with the situation has hampered the PLF and returns on some of these operating plants. GMR, GVK, NTPC, Torrent Power and Lanco together have 7,837 Mw of gas-based generation capacity. Lanco has 26 per cent exposure to gas-based projects; its 716 Mw Kondapali power plant recorded about 44.1 per cent PLF in August, as against 73 per cent last year. Torrent has operating capacity of about 1,700 Mw, of which 76 per cent is based on gas. "In the near term, we see lower fuel availability for its gas-based stations, impacting the return on equity from its generation assets," says Nayak.

Low on power (in Megawatts)
  Total
capacity
Gas based
capacity
Gas capacity 
as % of total
Gas capacity
in pipeline
GMR 823 823 100 750
GVK 908 908 100 1,600
NTPC 35,400 4,000 11 3,650
Torrent Power 1,648 1,252 76
Lanco 3,292 854 26 742
Source: Companies, Analysts’ reports

The case with India’s largest power generation company, NTPC, is similar. It has 90 per cent of its installed capacity of 35,400 Mw running on coal. For its 4,000 Mw of gas-based capacity, it has seen lower PLF. During the quarter ended June, say analysts, the company received 12 mscmd, about 23 per cent lower than its requirement; the shortfall was mainly caused by a decline in supply of 2.37 mscmd from "This fall from would keep the supply to NTPC under stress," says Rohit Singh, who tracks the power sector at
 

Gas supply projections (in mmscmd)
  FY10 FY11 FY12E FY13E
RIL KG-D6*  22.3 30.0 30.0 38.0
Others 36.2 36.5 36.7 42.1
Total supply 58.5 66.5 66.7 80.1
Gas requirement 
(90% PLF )
84.5 97.2 98.9 102.5
Effective 
availability (%)
69.3 68.4 67.4 78.2
E: Estimates;   * power sector allocation
Source: Motilal Oswal Securities

This trend of lower gas supply is also impacting upcoming gas-based capacity, since companies are going slow on For 2012-13, analysts have slashed gas production estimates from to about 55 mscmd, against their earlier estimates of 120 mscmd, though this is higher than the 45 mscmd of August. Currently, about 9,000 Mw of gas-based power projects are under construction or in the planning stage. Of this, 4,000 Mw is expected to be operational in 2011-12 and requires 16.4 mscmd of gas at 90 per cent PLF. Since supply is expected to remain static, analysts say the gap in demand and supply would only widen. GVK has suspended its expansion plan for the JP and Gautami power plants, after spending Rs 130 crore on these projects.

First Published: Tue, September 27 2011. 00:49 IST
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