Moreover, states are reluctant to procure power produced by NTPC on liquid fuel for being quite costly. NTPCs inability to assure procurement orders for liquid fuel to suppliers four weeks in advance due to reluctance of the beneficiaries to use liquid fuel makes it imperative to avail any opportunity of procuring spot RLNG on no take or pay basis as being offered by GAIL, IOC and BPCL on single-tender basis whenever they offer in addition to the existing tender made by NTPC.
NTPC has been procuring spot RLNG on reasonable endeavor basis with no take or pay or supply or pay commitments on either side. While the existing mode of procurement via tendering mode will continue as it is, NTPC may consider the procurement of RLNG on single-offer basis from GAIL, IOC & BPCL as and when the RLNG is available and offered by them. This would, to some extent, help in mitigating the shortages of gas, NTPC sources said. The state-run company has periodically been issuing tenders for procurement of spot RLNG from various domestic suppliers since June 2006 in order to mitigate gas shortfall.
According to NTPC official, the current average APM gas supplies are of the order of 8.8 mmscmd and the balance shortfall is intended to be met through procurement of spot RLNG. The availability of spot RLNG to NTPCs gas-based stations has been showing a reducing trend from about 4.23 mmscmd in June 2007 to 2.77 mmscmd in October 2007 and to around 2.34 mmscmd in 08-09 (till June). Since October 2007, the response to the spot RLNG tenders have been lukewarm, resulting in sizable reduction in the availability of spot RLNG, especially for the NCR region gas-based power stations. In fact, the spot RLNG availability to the NCR stations have been a meager 0.09 mmscmd since October 07 till date.
According to NTPC, the main reasons for the decline in availability of spot RLNG is the scarcity due to unexpected increase in demand for spot RLNG in worldwide market compounded by reduction of Petronet LNG Ltds (PLL) available Regas capacity due to commitment to supply 1.5 mmtpa RLNG to Ratnagiri Gas & Power Pvt Ltd.
The quantities of APM gas supplies have also reduced. As against the contracted gas supplies of 12.93 mmscmd with GAIL India, the current supplies are only of the order of 8.8 mmscmd. The APM gas supplies are showing a declining trend; from the earlier levels of 9.43 mmscm in 06-07 to 8.98 mmscmd in 07-08 to the levels of 8.24 mmscmd (June 08). The situation has got further aggravated off late, due to shutdown/ partial outage of ONGC platforms.
The cumulative effects have been that the total gas availability which has beer at the levels of 11. 75 mmscmd in 2007-08 (2.77spot + 8.98.APM) has dropped to 11.36 in 08-09 (till June) (2.34.spot + 8.81 APM + 0.21 spot PMT).
Acute shortage of gas at the stations is resulting in sub-optimal utilisation of the installed capacities and loss of PLF. Even arrangement of liquid fuel has been difficult because of supply side constraints bypublic sector oil marketing companies (OMCs).
The OMCs are seeking upfront commitment of offtake and advance intimation for supplies at least a month before for planning and effecting such supplies. In the absence of definitive commitment from beneficiaries to offtake power on liquid fuel, it is difficult for NTPC to provide such upfront commitment of offtake to the OMCs. Thus the overall situation of fuel to the gas based stations is very critical.
Off late, the prices of spot LNG are also showing an increasing trend. Currently, the price being quoted in the international market is between $21-23 ex-ship. There is a distinct possibility of this price going up further during peak winters. With the spiraling prices of liquid fuel there has been reluctance on the part of beneficiaries to give schedule. However, the prices are comparatively cheaper than Naphtha which is currently trading at around $37per million British thermal unit (Mmbtu). Although NTPC said eventhough power procuring states and utilities have not been giving full schedule of power purchase on spot RLNG, under the given circumstances when no other cheaper gas is available, spot RLNG alone remains the option to augment generation.
Besides, NTPC has also initiated informal discussions with PLL to find out whether the quantity of spot gas sourcing can be enhanced. This is keeping in view the fact that fuel risk being the responsibility of the generator, in order to arrange fuel for minimum 80% target availability for achieving full fixed cost recovery. PLL had informed during discussion that in view of committed quantities to be supplied under long term Ras gas contract and Ratnagiri power project contract, PLL was not having any reserve capacity. PLL further informed that they are in the process of expanding their capacity and it is expected that the capacity shall enhance to around 10 mmtpa by January next year.
Meanwhile, NTPC also held discussions with GAIL, IOC & BPCL to explore the possibility of sourcing additional gas/RLNG supplies at various gas stations. There exists a possibility of offering some additional quantities of spot RLNG from time to time by them to NTPC as and when RLNG is available with them. It also emerged that the availability of such RLNG may not synchronise with the various tenders issued by NTPC from time to time for procurement of spot RLNG and NTPC may need to process such offers separately. However, it was desired by these companies that NTPC should expeditiously decide and convey its consent for off taking the offered RLNG in a short duration of time preferably within 24 hours or so since the supply chain is linked and they also need to confirm to their suppliers, once the RLNG is offered to them. Further, as spot RLNG prices are a function of demand and supply, the prices offered by these companies may vary from time to time and it may not be possible to draw any price comparison of the prices being offered by these public sector undertakings, sources said.