NTPC accepts GSPCآ’s offer of gas to fire Kawas

Vol 9, PW 5 (16 Jun 05) Midstream & Downstream

Severe shortages of gas have forced National Thermal Power Corporation to backtrack on its very public pledge never to pay more than $3 per mmbtu.

After much hesitation and to avoid further embarrassment, NTPC has agreed to sign a contract with Gujarat State Petroleum for the supply of 1m cm/d of gas to fire its 645-MW power plant at Kawas in Gujarat. Last month, GSPC managing director DJ Pandian voluntarily offered gas to NTPC to help it ramp up electricity generation at Kawas to a maximum Plant Load Factor of 90%.

We were surprised when NTPC accepted our offer, a source tells PETROWATCH. We have begun supplies from 3rd June to Kawas through GAILs HBJ pipeline.

NTPC, it seems, is pleased with GSPCs quick response and is now asking for an additional supply of 0.5m cm/d. A formal contract will follow when NTPC and GSPC agree the final price and other terms in the gas supply and purchase agreement.

There is a slight change in our offer because NTPC now wants supplies for an entire year, adds a source. Technically our spot offer is no longer valid.

GSPC is offering to transmit gas to Kawas through its subsidiary Gujarat State Petronet but NTPC wants supplies to come through the HBJ. This has upset the entire mechanics of the deal, we learn.

We dont know why NTPC has decided to pay Rs1150 per square cubic metre as transmission charges to GAIL. When contacted, NTPC confirmed that it is buying gas from GSPC at a market rate of $4.06 per mmbtu.

NTPC is confident that this contract will not affect its contract with Reliance for the supply of gas to its Kawas and Gandhar power plants for $2.97 per mmbtu. GSPCs offer made sense to us because it meets our immediate requirement, adds NTPC.

We have not yet signed a formal contract with Reliance. This should be signed on or before 15th August this year.