China Light & Power angry with India

Vol 16, PW 14 (07 Feb 13) Midstream & Downstream

Frustrated by erratic gas and coal supplies at its power stations, Hong Kong-based China Light & Power (CLP) is thinking of quitting India.

CLP chairman Sir Michael Kadoorie was notable by his absence at the Vibrant Gujarat Summit last month (January) at Gandhinagar in Gujarat. Now we know why.

Company CEO Andrew Brandler wrote to Prime Minister Manmohan Singh in January to complain about crippling gas shortages at its 655-MW gas-fired power station at Paguthan in south Gujarat. Brandler says CLP’s shareholders question the long-term viability of Paguthan.

Question marks also hang over the fate of CLP's 1320-MW Jhajjar power station in Haryana, commissioned in January 2012. Coal supplies at Jhajjar have fallen below 50%, seriously affecting operations.

“CLP management needs to find solutions to its gas and coal supply problems,” writes Brandler. “Otherwise CLP will be forced to reconsider its present and future investments in India.

” That won't please the PM at all: CLP is the largest foreign player in India's power sector with investments totalling Rs12,000cr ($2.25bn). Paguthan needs 3.1m cm/d but receives less than 1.6m cm/d from domestic sources, forcing it to run at 40% installed capacity.

CLP signed a long-term Fuel Supply Agreement (FSA) with Reliance for 1.3m cm/d on April 24, 2009. But it hardly receives 620,000 cm/d.

Paguthan also gets 160,000 cm/d from Cairn’s Lakshmi field under a contract valid until 2023. Another 400,000 cm/d comes from GSPC while PMT gas is from GAIL.

Gas supply shortages have forced CLP to put a proposed 1050-MW expansion at Paguthan on hold.