RIL signs gas supply pacts with Pragati Power, NTPC
New Delhi: After initially resisting, Reliance Industries Ltd (RIL) has agreed to sign agreements with Pragati Power Corp and NTPC for supply of natural gas from its eastern offshore KG-D6 fields.
With output from KG-D6 continuing to decline, RIL was against signing new Gas Sale and Purchase Agreements (GSPA) as meeting new supply commitments would have meant cutting gas supplies to existing power plants.
But under intense pressure from Delhi government and oil ministry, RIL has now agreed to sign GSPAs for supply of 2.16 million standard cubic meters per day to Delhi's Bawana power project and NTPC, industry sources said.
RIL has informed the Delhi government and Pragati Power Corp of its intention to sign GSPA for supply of 0.93 mmsmcd of gas and has forwarded a draft agreement.
KG-D6 fields had seen drop from 61.5 mmscmd in March, 2010, to about 32 mmscmd, forcing pro-rata cuts on customers.
Sources said the new pacts would mean supplies to 25 power plants who were allocated gas from Krishna Godavari basin fields, further going down.
Private power producer Lanco has already warned of power plants, which are currently operating at less than 38 percent, shutting down if supplies are cut any further.
Supplying gas to Bawana and NTPC would mean supplies would further reduce to uneconomical levels of 20-25 percent.
While the KG-D6 gas supplies dropped, the pro-rata cut was applied only to the 25 power plants which had an original allocation of 28.90 mmcmd. Fertiliser plants, which were allocated about 15 mmscmd of KG-D6 gas, did not face such a cut.
Supplies to Pragati Power would mean a further drop in supplies to power plants, sources added.