India?s exploration and production major Oil & Natural Gas Corporation (ONGC) was forced to curtail the natural gas price to $11 per million British thermal unit (mmBtu) from its offer price of a record $16 per mmBtu to Maharashtra State Power Generation Company (MahaGenco).
This took place after the intervention of the petroleum minister Murli Deora. MahaGenco would be able to get 1 mmscmd of gas from ONGC for its Uran power plant which will be able to increase its generation to around 650 to 700 mw from the present level of 450 mw.
Uran gas plant with the total generation capacity of 850 mw is running below capacity for lack of gas but with the availability of 1 mmscmd of gas the additional generation will help provide partial relief to the power starved Maharashtra. ONGC?s offer price of $16 per mmBtu was challenged by MahaGenco as it argued that it was extraordinarily high for natural gas.
MahaGenco argued that if the gas price is compared with RIL KG D6 gas at $4.20 per mmBtu, its quite high and it would not be possible for MahaGenco to sustain its operations. MahaGenco called upon ONGC to bring the gas price to RIL?s gas price and also offered to provide a bank guarantee of Rs 100 crore.
Analyst said that ONGC?s offer price of $16 per mmBtu was at higher side compared to spot LNG price ranging between $14 to $25 per mmBtu. Even for a long term LNG supply, GAIL recently offered over $22 per mmBtu to NTPC for carryint out expansion of 1,500 mw at its Kayamkulam project in kerala.
The state government sources said, ?The issue came up for discussion during the meeting between chief minister Vilasrao Deshmukh and Deora on Saturday. Deora upheld MahGenco?s submission and asked ONGC to provide gas at $11 per mmBtu and latter assured that he will consider MahaGenco?s plea for further reduction.?
The state government also called upon Deora to organise additional gas supply to Ratnagiri power project previously Dabhol project which is currently generating upto 600 mw against 1,400 mw. Meanwhile, Maharashtra is reeling under acute power shortage during monsoon season. The Maharashtra State Electricity Distribution Company (MahaVitaran) is compelled to carry out a load shedding of 8.30 hours to 15 hours in various parts of state due to power deficit of 4,800 mw.