1. Stranded power plants get Qatar lifeline; SPV planned to help source fuel

Stranded power plants get Qatar lifeline; SPV planned to help source fuel

In what could give a lifeline to several stranded gas-based power plants, Qatar may enter into a long-term contract to supply gas to them. The power plants will form a special purpose vehicle (SPV) where Qatar’s gas producer RasGas will also have a stake.

By: | New Delhi | Published: June 20, 2017 7:40 AM
power plant, qatar india, gas production Qatar has a gas production capacity of 77 million tonne a year, of which India buys 15% and Japan buys 25%. (Reuters)

In what could give a lifeline to several stranded gas-based power plants, Qatar may enter into a long-term contract to supply gas to them. The power plants will form a special purpose vehicle (SPV) where Qatar’s gas producer RasGas will also have a stake.

“We are talking to Qatar to have a back-to-back tie-up with the stranded power plants. There could be an SPV and along with Qatar, we can plan to make these power plants start working,” said petroleum minister Dharmendra Pradhan on Monday. “Qatar has an end-to-end solution as they are producers and suppliers too, and it (RasGas) will get a market here,” the minister said.
The move could benefit GMR, Lanco, CLP, Essar Power, among others.

As on May-end, India’s installed capacity of gas-based power plants was 25,185 MW —7.6% of the overall generation capacity. Of these, 10,580.60 MW capacity is with the private sector.On an average, however, there plants operated at a PLF of 22.2% in the April-May 2017 period, putting their viability in jeopardy. The average private-sector gas-based power PLF in the period was even worse at 13.17%.

Pradhan added that though India is still heavily dependent on coal-based power, the renewable sources have become competitive of late. “In the coming days, the way renewable energy is growing, we will require a mixed grid and gas-based power will be required,” added Pradhan.

Qatar has a gas production capacity of 77 million tonne a year, of which India buys 15% and Japan buys 25%. “In the coming years across the world, there will be surplus LNG. Russia and the US will also add capacity,” Pradhan said, adding India is providing market security to all producers. “That is why Aramco and Roseneft wants to come to India. These are all producing countries and for a long time they will get market security from India as a buyer,” he said.

The development comes at a time when Qatar is going through a crisis as some of the West Asian countries, including the United Arab Emirates, Saudi Arabia, Bahrain and Egypt, have stopped transactions with Qatar over an allegation that it supports extremism in the region.

According to the Petroleum and Natural Gas Regulatory Board’s Vision 2030 document, the country’s natural gas demand will grow significantly at a compounded annual growth rate of 6.8% from 242.6 MMSCMD in 2012-13 to 746 MMSCMD in 2029-30, and gas-based power generation is expected to contribute around 36% in 2012-13 to 47% in 2029-30.

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India’s gas-based power plants generated 8.2 billion units (BU) of electricity during the period and private sector’s generation was 2.3 BU. Between FY11 and FY17, gas-based electricity generation has plummeted from 103 BU to 49.1 BU, with PLFs falling from 66.2% to 22.5% in the period.

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