Gail asks AP-based IPPs to look for alternate fuel

Hyderabad, May 8 | Updated: May 9 2005, 06:01am hrs
Having found it difficult to meet the gas requirement of the existing independent power producers (IPPs) in Andhra Pradesh, GAIL (india) Ltd has requested the IPPs to look for alternative arrangement to supplement the gas supplies in case of any possible shortage of gas availability.

As a matter of abundant precaution, GAIL in its agreement with IPPs had a clear provision requiring the IPPs to make arrangements for alternative fuel to supplement their gas supplies, GAIL said here on Saturday.

According to a statement, in line with the decision taken by the ministry of petroleum and natural gas in December 2004, the current availability of 7 mmscmd will be supplied on a pro-rata basis among all the consumers having firm allocations in the KG basin area including the new IPPs such as GVK Industries, Konaseema Power, Gauthami Power and Vemagiri Power, GAIL said.

To defuse the crisis further, the gas major is also holding talks with the ministry of petroleum and natural gas, ONGC as well as the joint venture operators in Ravva Satellite fields to step up their production till such time the major discoveries in the Krishna-Godavari (KG) basin area materialise, the company further said.

GAIL also said that the availability of natural gas in the KG basin from ONGC has come down by 17% between 2002-03 and 2004-05. Similarly, the gas supply by the joint venture operators of Ravva Satellite fields have also come down by 5% during the same period.

Anticipating the shortage of natural gas in the KG basin area, GAIL as early as in 1999-00 had proposed an LNG terminal at Kakinada. Further, November 2002, the ministry of petroleum decided that the terminal would be constructed by the Indian Oil Corporation. The proposed LNG terminal at Kakinada has not progressed as expected, hence the crisis, the company pointed out.

Meanwhile, the company is also going ahead with the creation of new pipeline infrastructure to meet the schedule of commencement of gas supply to the new IPPs even though as a pro-rata share of the existing availability of natural gas.