GSPC offers spot gas at $5 per mmbtu to NTPC

Vol 9, PW 4 (01 Jun 05) Midstream & Downstream

Gujarat State Petroleum has begun testing the market with offers to sell R-LNG on a spot basis at market-determined rates.

In mid-May, GSPC chairman DJ Pandian made what many believe is the first offer of spot gas to a customer in the fertiliser or power sector when he wrote to National Thermal Power Corporation offering to supply 1m cm/d to its 645-MW power plant at Kawas in Gandhar. GSPC has offered NTPC gas on a spot basis for between $4.5 to $5 per mmbtu, reveals a source, This is with an assured delivery guarantee.

Confident, GSPC believes it is offering a very reasonable price to NTPC for its gas. Our buying price from Shell Hazira is not a secret anymore, he adds.

NTPC cannot expect us to make a loss and sell the gas at a lower subsidised rate. Some GSPC officials, it seems, were reluctant to sell gas to NTPC because until now it had shown no interest.

We have offered them gas only for the sake of Gujarat Electricity Board. GEB is one of five state electricity boards to which NTPC supplies power through the western regional electricity grid.

NTPC prefers to generate less power by using expensive fuel like naphtha but refuses to touch gas which is sold at market prices, he adds. Isnt it funny for a government company to choose not to generate more power while states like Maharashtra suffer violence and riots because of daily power cuts Why did GSPC make this seemingly generous offer Two main reasons, we are told.

We want to promote gas in the country. Second, we want to convince users that gas prices are not artificially jacked up like those of other comparable liquid fuels.

GSPC is yet to receive a favourable response from NTPC. When contacted, officials from NTPCs fuel management team refused to comment.