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Govt doubles gas supply from RIL`s KG field to Dabhol plant

Last Updated: Thursday, September 17, 2009 - 23:19

New Delhi: The government has more than
doubled the allocation of natural gas from Reliance
Industries` KG fields to the beleaguered Dabhol power plant,
which is likely to begin drawing the fuel from next month.

The government had previously allocated 2.7 million
standard cubic meters per day to Ratnagiri Gas and Power Pvt
Ltd (RGPPL) - the company that runs the Dabhol power plant in
Maharashtra — and the same has now been increased to 5.67
mmscmd from October 1.

Petroleum Ministry sources said the allocation has been
raised on request of RGPPL, which wanted more gas to increase
electricity generation.

RGPPL was allocated 2.7 mmscmd of gas for the period
between April and September but the company had not draw even
a single unit as it had a running contract with Petronet LNG
Ltd to buy imported liquefied natural gas.

The contract, sources said, is coming to an end on
September 30 and RGPPL would from the every next day start
taking KG-D6 gas, a move that will help the company cut down
its fuel cost.

RGPPL — co-owned by state power utility NTPC and gas firm
GAIL India - was among the three firms which were yet to draw
on even a single unit of KG-D6 gas allocation. The others are
NTPC, which has not yet signed a Gas Sales Purchase Agreement
(GSPA) for its entitlement of 2.67 mmscmd, and Essar Power
that is negotiating a transportation agreement.

The Petroleum Ministry in a letter dated September 15 had
informed RIL and its minority partner Niko Resources of the
increase in allocation and said, "GSPA with RGPPL should be
modified suitably."

The delivered cost of RIL`s KG-D6 gas to Dabhol would be
around USD 6.5 per million British thermal unit, one-fifth
cheaper than what is pays currently.

RGPPL did not take KG-D6 gas previously as it had a `take-
or-pay` contract with Petronet for supply of gas. The
delivered price of imported LNG at the Dabhol plant came to
around USD 8 per mmBtu.

Sources said KG-D6 gas would help RGPPL generate about
1,000 MW of power at lower cost.

RIL can produce 60 mmscmd of gas from KG-D6 fields but is
restricting output to just 36-36 mmscmd in absence of offtake
from existing customers like RGPPL and NTPC and failure of the
government to name consumers beyond the initial 40 mmscmd.

Bureau Report

First Published: Thursday, September 17, 2009 - 23:19

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