New electricity law forces Tata Power rethink on LNG

Vol 7, PW 6 (04 Jun 03) People & Policy

TATA POWER is planning to restructure its business as a direct result of the impending Electricity Act that rejects naphtha, fuel oil and LSHS over gas as feedstock to fire power plants.

Oil is conspicuous by its absence from resources in the act, reveals a source. This means well have to switch over to gas within a year.

Under the new act, the proposed National Electricity Plan states that natural gas, coal, nuclear substances, hydro and renewable sources of energy are the preferred fuel - not oil. Worried, Tata Power set up an internal task force in late March to study the implications of the new act on its business, especially on its 1,350-MW combined cycle power plant at Trombay.

In May the task force submitted its report to the board with a clear and forthright recommendation to reverse the companys 18th October 2000 decision to split its business into three separate companies for generation, distribution and transmission. Board approval is awaited, and when this comes, Tata Power says it will begin scouting for 1.5m cm/d gas for Trombay.

Until now, Tata Power relies on ONGC for its gas but ONGC is unable to supply the quantities required. In March, gas-starved Tata Power asked oil minister Ram Naik to persuade ONGC to increase its allocation to the company and supply extra gas from its marginal fields C-22, C-24 and C-39.

Several companies including Reliance have approached us with offers of natural gas, adds a company source. But nobody talks of the right price.

When they do, well finalise a deal. Like others, Tata Power says it won't pay more than $3 per mmbtu for its gas.