BSES needs more gas for its plant in Andhra Pradesh

Vol 7, PW 19 (03 Dec 03) People & Policy

Chief minister Chandrababu Naidu of Andhra Pradesh normally gets his way in Delhis corridors of power.

But Naidus pivotal position in the countrys ruling coalition and his considerable political influence count for nothing in securing more gas for Mumbai power utility Bombay Suburban Electricity Supply, or BSES, which operates BSES Andhra Power. Naidu has written to oil minister Ram Naik requesting that he convert the 0.36m cm/d (unreliable) fallback allocation to BSES Andhra Power from GAIL into a firm allocation.

Naidu argues that BSES Andhra Power has insufficient gas to operate at the 85% capacity for which it is paid by state-owned power distribution utility AP Transco. Naidu insists that BSES Andhra Power needs 1m cm/d gas to operate at 85% capacity, but has a firm allocation of only 0.64m cm/d.

He suggests balancing the BSES demand with those of five proposed Andhra power plants who have been allocated 7.05m cm/d gas. These are: Spectrum Power Generation, GVK Industries, Vemagiri Power Generation, Konaseema Power EPS Oakwell and Gautami Power.

Naidu wants the ministry to adjust BSES new firm allocation of 0.36m cm/d from the 7.05m cm/d for the five power projects. This conversion can be made, writes Naidu, subject to the condition that if within the next 24 to 30 months any of these power projects are completed and commence using gas and no fresh source of gas is found in the KG Basin, then this conversion to BSES may be reversed.

But neither GAIL nor the oil ministry are convinced with Naidus argument: for the simple reason that there is no surplus gas available locally. Additional gas will only become available if ONGC begins producing 2m cm/d from its deepwater G-1 field by 2005 and by 2006 when it is scheduled to produce 3m cm/d from the Annapurna gasfield in block KG-DWN-98/2, recently acquired from Cairn Energy.

Even then, local company GVK Industries has a court order giving it first right to 0.15m cm/d of any surplus gas in the region. Only when this allocation is met, will BSES get what it wants.