Reliance Industries (RIL) has complained to Power Ministry about NTPC's reluctance to sign an agreement to buy gas from it and said that the power PSU stands to lose Rs 15,000 crore if it imports LNG. The government had allocated 2.67 million standard cubic meters per day (mmscmd) of gas from RIL's eastern offshore KG-D6 fields to NTPC, but unlike the 35 other customers identified for the gas, the state-run firm is yet to sign a Gas Sales and Purchase Agreement (GSPA).
Mr Prasad, in the letter, has emphatically stated that much against the publicised campaign regarding NTPC’s losses, the company will remain unaffected by any change in the gas price. The Anil Ambani group had alleged that the state power utility will lose around Rs 30,000 crore due to the hike in gas prices. “The difference in fuel price between $4.2/unit and $2.34/unit results in an increase of power costs by not more than 60 paise/unit. NTPC remains unaffected because the cost of fuel is passed on to state electricity boards,” the letter said.
Mr Prasad has also questioned NTPC’s 10-year contract for RLNG, which, he insists, will cost the company much more than KG D6 gas. “At an assumed price of $60/bbl for crude oil, the average delivered price for this RLNG is at $11.2/mmbtu. On the other hand, the KG D6 gas as per $4.2/mmbtu will result in a delivered price of $6.5/mmbtu,”
RIL's KG-D6 fields can today produce more than 60 mmscmd but the company is forced to cap output at 36-37 mmscmd as customers like NTPC have not started taking their quota.
"In our last meeting with NTPC on August 12, all issues relating to finalisation of GSPA were resolved and NTPC was to revert after obtaining internal approvals. However, we are still awaiting a formal response from NTPC in spite of regular follow-up," RIL Executive Director P M S Prasad wrote to Power Secretary H S Brahma on August 31.
RIL had agreed to sign the GSPA with the caveat that the agreements would be "without prejudice" to the outcome of the case in Bombay High Court over a 2004 tender where the Mukesh Ambani firm had quoted $2.34 per mmBtu as price for gas to be supplied to NTPC's Kawas and Gandhar plants, he said.
Instead, NTPC has signed-up to buy 2.5 mmscmd of LNG for 10 years from overseas market and the delivered cost of this would be $11.2 per mmBtu as compared to KG-D6 burner tip cost of $6.5 per mmBtu, leading to a loss of Rs 600 crore per annum. Besides, NTPC buys 3-4 mmscmd LNG on spot basis, resulting in additional outgo of Rs 900 crore per annum.
RIL's KG-D6 fields can today produce more than 60 mmscmd but the company is forced to cap output at 36-37 mmscmd as customers like NTPC have not started taking their quota.
"... It is indeed strange that NTPC does not want to discuss the GSPA for the existing Kawas and Gandhar plants even through the ongoing litigation relates to the proposed expansion of Kawas and Gandhar plants. RIL, therefore, finds this stance of NTPC quite incomprehensible," Prasad wrote.
He rebutted NTPC's claims that the $4.20 per mmBtu price for KG-D6 gas (delivered price of $6.54 after adding taxes and transportation) would result in increase in cost of power, saying the difference between $4.2 per mmBtu and $2.34 per mmBtu rates "actually results in an increase in the cost of power by not more than 60 paise per unit."
"Moreover, NTPC remains unaffected by any change in price of fuel because the cost of fuel is passed on by NTPC to the state electricity boards," he wrote. "If NTPC buys gas from KG-D6, it would actually result in significant reduction in cost of power purchased by the SEBs from NTPC compared to the cost at which the SEBs are today being forced to buy power from NTPC."
The average cost of power by NTPC to SEBs in 2008-09 from its Kawas and Gandhar plants was Rs 6.34 per unit and Rs 4.64 per unit respectively, implying average cost of fuel purchased by NTPC was $16 per mmBtu and $11 per mmBtu, respectively.
Thus, the total potential increase in cost of power by NTPC’s decision to buy about 6 mscmd R-LNG instead of D6 gas, could be about Rs 1,500 crore a year, which will be borne by the State electricity boards and the consumers.
Source:ET
_____________________________________________________________________________________
Posts
No comments:
Post a Comment