Agreement for additional gas supply to state

New Delhi, March 17 (INN): An agreement for ensuring supply of additional gas to the power projects in Andhra Pradesh was signed in New Delhi on Thursday. The agreement was signed between GAIL, RIL, RGTIL and power plants in Andhra Pradesh.

This would enable additional power production of almost 600 MW in Andhra Pradesh (12 million units per day), which is critical for the State in summer months. The scheme of swapping arrangement was discussed with officials from Government of Andhra Pradesh, GAIL, RIL and RGTIL.

It involves detailed contractual agreements on account of regulations regarding transportation and varying taxation regime in various States. Finally, GAIL, RIL, RGTIL and IPPs in Andhra Pradesh have agreed to contractual agreements to implement the swapping arrangement. This would enable supply of additional quantity of 2.594 mmscmd gas to power plants located in Andhra Pradesh, leading to additional power production of almost 600 MW, which is extremely critical for the farmers of the State.

This additional energy would energise 29 lakh pump sets during the coming summer and would help farmers by saving the standing crop. Generation of the electricity through gas would result in savings of approximately Rs 250 crore to the State as compared to generation from Naphtha.

Andhra Pradesh has been given very high priority in allocation of KG D6 gas, especially to power plants situated in the State. It has been ensured that all existing gas-based power plants in the State are given KG D6 gas to enable their operation at 75 per cent PLF as against 70 per cent PLF for power plants outside the State.

Thirteen existing gas-based power plants in the State have been allocated 9.64 mmscmd KG D6 gas, which has led to additional power generation of around 2000 MW. Four power plants, which had been stranded for lack of gas, have become operational after commencement of KG D6 production. The state government had communicated that power plants in Andhra Pradesh are suffering certain deficit of natural gas for optimum power generation.

It had said that the state needs to increase power generation from its gas-based IPPs to meet the summer demand till May 2011 and wanted that RLNG should be used for the same. Andhra Pradesh does not have connectivity to an LNG plant.

Further, RLNG from LNG plants located in Gujarat cannot flow from West to East against KG D6 flow from East to West. Swapping of RLNG with GAIL's KG D6 allocation has been considered. This involves diversion of KG D6 gas from GAIL's LPG plants to IPPs in Andhra Pradesh and compensating equivalent quantity of RLNG procured by IPPs through GAIL. APDISCOMs are willing to pay, apart from the cost of RLNG, requisite costs like marketing margin, transportation charges, inter-state and intra-state taxes, whichever will be applicable, on account of the proposed swapping.

Apart from ensuring additional supply of gas to customers in Andhra Pradesh, the arrangement would also form the basis for supplying RLNG to new areas in the country, who are physically not connected to LNG Terminals. The country presently has regasification capacity of 10 mmtpa.

The LNG terminal at Dabhol is about to be commissioned and Kochi Terminal would be ready by the next year. In this scenario, it is extremely important that the customer base of RLNG in the country is increased. In this context, supply of RLNG to customers, who are physically not connected to LNG terminals, becomes important.