Telling the PM about gas shortage in Andhra Pradesh

Vol 8, PW 14 (06 Oct 04) People & Policy

Andhra Pradesh is in no doubt about who to blame for the states acute gas shortage: GAIL and ONGC.

On 28th September Andhra Pradesh chief secretary Mohan Kanda, accompanied by a battery of state officials, made plain his disappointment in a meeting with TKA Nair, principal secretary in the Prime Ministers Office. Kanda was in Delhi to lobby for more gas supplies for five Independent Power Projects in Andhra Pradesh: 230-MW GVK Phase-I 208-MW Spectrum Power Generation 170-MW Vijjeshwaram project from AP Gas Power Corporation 350-MW Lanco Kondapalli project 230-MW Samalkot project from Reliance Energy We are allocated 4.8m cm/d of gas for these projects but GAIL supplies only 3.69m cm/d, an AP official who attended the meeting tells us.

We are forced to purchase power from the Power Trading Corporation at a higher cost. This increases our fixed costs and ultimately the tariff, which is passed on to the customer.

Andhra Pradesh is no different to other Indian states in warning of a grave financial crisis if adequate gas supplies are not restored. We are facing a loss of Rs1000cr annually if these power projects continue to use naphtha.

During the meeting, the PMO summoned oil secretary Sushil Tripathi and representatives from ONGC and GAIL to respond. GAIL refused to take responsibility saying it is only a transporter of gas and that ONGC is responsible for gas supplies, adds the official.

ONGC then assured us before Mr Nair that it is determined to step up activities in the Krishna Godavari Basin to increase commercial supplies of gas by 2006-07. ONGC promised that it would supply about 2m cm/d additional gas from its deepwater G-1 field by 2005 and 3m cm/d from the Annapurna gasfield in block KG-DWN-98/2 by 2006.