Tough grading for firms seeking gas on anvil

The central government is all set to weed out non-serious companies seeking gas allocation for power projects with a stiff grading system in place.

As per grading norms, only companies with firm land, water allocation, sound financial background and equipment sourcing contracts will be given priority for gas linkages, a power ministry official said. Central Electricity Authority (CEA) that evolved grading norms submitted them to power ministry.

CEA, planning body for power sector, has received 104 proposals from private and public sector power developers with envisaged capacity of 118,000-mw for gas linkages.

These projects will require 570 million metric standard cubic meters per day (mmscmd) gas even if the power plants are operated at 90 per cent plant load factor. All the power projects are slated for commissioning in twelfth plan beginning 2013. Coal and gas linkages to power projects are provided based on recommendations made by CEA.

?The authority has proposed that private power projects should be rated depending on progress made in land acquisition, forest clearances and sourcing of equipment. Each factor would be assigned specific weightage points. Projects with high points would be recommended for gas linkages,? power ministry official said.

Projects with complete land acquisition would have an edge over others, he said. A similar approach was devised for short-listing coal-based power projects.

?The approach gains importance in the wake of gas scarcity that the country is faced with,? the official said.
Power utilities at present are drawing nearly 44 mmscmd gas from Reliance Industries? KG-D6 basin. Power ministry has indicated an additional 18 mmscmd gas will be required for power projects to be commissioned during this financial year.

Presently, India?s demand for natural gas is pegged at 170 mmsmcd. Out of this, 142 mmscmd is sourced from domestic fields and rest is imported. The country's natural gas production from home fields is expected to touch 151 mmscmd by 2011-12 and 186 mmscmd the following year. Reliance Industries Limited operated D6 block in KG basin is at present producing 55-60 mmscmd. The production is expected to touch 80 mmscmd only by 2012-13.

Maharashtra State Power Generation Corporation, Torrent Power, GVK Power, GMR Energy, and Gujarat Powergen Energy Corporation are some of the companies that have submitted proposals for gas linkages. Projects of these companies set to be commissioned in 3-4 years.

A CEA official said there is a rise in investor confidence in gas-based power plants as these projects have lesser gestation period of two years and are environment friendly. ?Companies are free to sell power in open market or to power exchanges at higher cost. These act as good signal to investors to invest in a particular sector,? he added.
However, availability of adequate gas remains a big question, he said.

Source: Financial Chronicle, Delhi, Thursday, 12th August 2010
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