Kerala 'basket case' is no attraction for GAIL

Vol 16, PW 5 (20 Sep 12) Midstream & Downstream

GAIL faces major disappointment in Kerala where none of the proposed gas-based power stations are likely to happen.

Estimated total R-LNG demand in Kerala is only 1.7m cm/d, according to GAIL, and this within Kochi alone. How, asks GAIL, will it find a home for R-LNG when the Kochi LNG terminal doubles capacity next year Three state-promoted gas-based power projects in Kerala offered some hope: the Brahmapuram 80-MW diesel-fired power station in Kochi, which was to be upgraded into a 1500-MW gas-fired power station, requiring 5m cm/d R-LNG; the new 3000-MW Cheemeni power project, half of which was to use 5m cm/d gas, while the other half was to be run on coal; and finally a 80-MW diesel-fired power plant with plans to convert to R-LNG.

Also promised was the NTPC-owned naphtha-fired 350-MW Kayamkulam power station, whose capacity was to be raised to 1500-MW requiring 5m cm/d R-LNG. But none of these projects are happening! High-priced R-LNG is clearly a deterrent.

But that is not the whole story. Equally important, we hear, is Kerala’s unfriendly business climate.

“For two years the Kerala State Electricity Board was headed by part-time chairmen,” we hear. “None of them were interested in gas-fired power.

” Instead, he adds, Kerala’s ruling politicians are now obsessed by getting piped gas to the capital Thiruvananthapuram through a subsea pipeline from Kochi around 220-km away. “Thiruvananthapuram is a small city which can consume at the most 300,000 cm/d as CNG and piped gas,” shrugs GAIL.

“It makes no sense to lay a pipeline just for this.” With no major R-LNG customers in Kerala, GAIL is focused only on completing the pipelines to Karnataka and Tamil Nadu to evacuate R-LNG from the Kochi LNG terminal.

After that, it wants to move out.

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