Qatar mulls buying stake in NTPC's Kayamkulum power plant

Qatar is mulling to pick 40 per cent stake in state-run NTPC's Kayamkulum power plant in Kerala, a top official said. NTPC plans to create a Special Purpose Vehicle (SPV) into which it would divest all Kayamkulam assets and offer a stake to Petronet LNG Ltd and Qatar. Petronet has already agreed to pick up 10 per cent stake in the plant and informed NTPC of its decision.

"Qatar Investment Authority (QIA) is looking into the offer," the official said after Qatar's Second Deputy Prime Minister and Ministry of Energy and Industry Abdullah Bin Hamad Al Attiyah called on Prime Minister Manmohan Singh.

NTPC is keen to get Qatar in Kayamkulum project, as the Gulf nation would in return bring gas for the plant. The public sector firm runs the 350 MW power plant at present and plans to expand it to 2,300 MW, but has been unable to tie up natural gas for the purpose.

Ras Laffan Liquefied Natural Gas Co, a Qatar Petroleum joint venture with Exxon Mobil Corp, had signed an agreement with India's Petronet LNG Ltd (PLL) in 1999 to sell 7.5 mt of the fuel annually, Petronet currently imports five mt at its Dahej terminal in Gujarat and would start importing the rest 2.5 mt from 2009.

He said Qatar was offered an opportunity to pick up Petronet's $100 million foreign currency convertible bond (FCCB), which upon conversion into equity shares would translate 7.5 to 12.5 per cent equity stake in Petronet.

QIA also already completed financial/commercial due diligence of Petronet's Dahej terminal. Qatar is also discussing participation in Oil and Natural Gas Corp's (ONGC) upcoming 12.6-billion dollar petrochemical hub at Mangalore. Qatar had in April committed one mt LNG for the project. ONGC, the official said, also offered Qatar a stake in its 3-billion dollar dual feed cracker and petrochemical complex at Dahej.

LNG for Dabhol

Qatar has agreed to supply 1.2 million tonnes per annum of Liquefied Natural Gas (LNG) to fire the Dabhol power plant in Maharashtra, but differences persist over the price.

"RasGas has agreed in principle to supply 1.2 mmtpa of LNG from March 2007 to early 2009," a top official said after Qatar's Second Deputy Prime Minister and Ministry of Energy and Industry Abdullah Bin Hamad Al Attiyah called on Prime Minister Manmohan Singh here.

Petroleum Minister Murli Deora accompanied Attiyah. Petronet LNG Ltd, which has been contracted by Ratnagiri Gas and Power Pvt Ltd - the new owner of Dabhol plant, would import 1.25 mmtpa of LNG at its Dahej terminal in Gujarat and supply it to the power plant through the Dahej-Uran pipeline.

However, the two sides have not been able to agree on the price of gas. While RasGas marginally lowered its earlier offer price of about 10 dollars per million British thermal unit (mBtu), the Indian firm was willing to pay no more than 5.5 dollars per mBtu, the official said.

"They are still insisting on a price of 7-8 dollars per mBtu," he said. The official said further discussions on price would be held today and tomorrow and expressed hope to persuade RasGas to agree at a price of 5.5 dollar per mBtu.

This would translate into a delivered cost of 7.3 dollars per mBtu. At 8 dollars per mBtu burner tip price, the variable fuel cost comes to Rs 2.68 per unit. Together with the fixed cost of Re 1 per unit, the generation cost would be Rs 3.68 per unit.

The Dahej terminal already receives 5 million tonnes per annum of LNG from RasGas under a separate long-term contract. The terminal has 1.25 million tonnes of spare capacity that would be utilised for imports for Dabhol.

LNG will be imported at Dahej as the 5 million tonnes per annum LNG import facility adjacent to the Dabhol power plant, though to be fully completed by March 2007, cannot be operationalised without a breakwater. After the construction of the breakwater by June 2009, GAIL, which is equal partner with state-run NTPC in RGPPL, will arrange for long-term LNG supplies.

Source: The Pioneer, New Delhi
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