Power
Capacity Addition may Trip on Gas Supply Shortage
Around
8,000 mw of capacity may get stranded; power units may at best be able to get
fuel to run at low capacity
RACHITA
PRASAD MUMBAI
At
a time when the country is struggling to fill the gap between power demand and
supply, almost 8,000 megawatt of new gas-based power capacity may be stranded
due to lack of fuel as the domestic gas output continues to fall with no signs
of recovery in sight. The power units that could have helped the country reduce
its peak-time power deficit of 14% would at best be able to secure enough fuel
to run at a low capacity, power sector experts said.
“Around
8,000 mw may be ready without gas linkage by March and the generation may not
happen as per the planned scheduled,” a senior power ministry official told ET.
“But
we have been talking to the petroleum ministry to work out a solution to deal
with the problem. We may have to ration gas supply to power units,” the
official said.
Ministry
officials said that these 10 projects, aggregating to 8,000 mw, would require
28 million metric standard cubic meters a day (mmscmd) of gas. Reliance
Power, GMR Infrastructure, Lanco Infratech, among others, are close to completing
new power units that are yet to get gas linkages. Power generators had
fast-tracked their gas-based projects driven by the outlook on gas availability
from the Reliance Industries’ Krishna-Godavari D6 block. But the production
from the block has decreased to less than 45 mmscmd from 60 mmscmd, trailing
behind the ambitious target of 80 mmscmd. Earlier this month, in a written
reply to a question in Rajya Sabha, minister of state for power KC Venugopal
said that to deal with the shortage of natural gas, the ministry of petroleum
and natural gas is taking the necessary steps to increase availability of gas
from domestic sources and encourage import of LNG. However, generators may not
find running the units on LNG cost-effective, given the current market price of
over $15 for every million metric British thermal units (mmBtu), which is
substantially higher than that of natural gas from KG-D6 at $4.2 per mmBtu and
gas under the administered price mechanism, which is over $5 per mm Btu.
India
has an installed gasbased power generation capacity of 16,640 mw as on end of
July, which accounts for 12% of the country’s total power generation. Of the
total 160 mmscmd of natural gas in the country, almost 40% is being supplied to
the power sector. While allocating 91.6 mmscmd of gas in July 2010, the
empowered group of ministers had said that the power sector would be supplied
43.1 mmscmd of the gas. It had also allocated 10 mmscmd gas to captive power
plants on a fallback basis. However, analysts believe that by the end of the
11th Five Year Plan in 2012, the total gas requirement may be 130 mmscmd.
“The
market has been distorted with the policy framework on gas allocation.
Developers were given assurance by the government that gas would be available
for the 11,704 mw capacity being set up in the 11th Five Year Plan but there is
no availability now,” Association of Power Producers’ director general Ashok
Khurana said. Taking cues from the crunch in natural gas supply, developers are
re-looking at their expansion plans and in some cases even shelving the
projects. GVK Power and Infrastructure has put on the back burner its plans to
expand gas-fuelled power projects in Andhra Pradesh by a total of 1,600
megawatts with an estimated investment of . 6,000 crore due to unavailability
of gas. GVK had already placed equipment orders for the two units with Alstom
Projects and Larsen & Toubro-Hyundai Engineering consortium. But companies
which have already set up the power units may be left in a lurch if the gas
supply is not allocated in time.
“Most
companies are going to abstain from adding new capacity because fuel
availability is bleak. But if the government diverts gas from non-priority
sector to priority sector and ration it among units which are ready, we can
expect gas units to operate at PLF (plant load factor) of higher than 50%,”
said A Subba Rao, chief financial officer of GMR Group.
Source: ET
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