Costly R-LNG doubts over Raigad power

Vol 17, PW 7 (31 Oct 13) Midstream & Downstream

Pioneer Gas Power, which has nearly completed the construction of its 388-MW Raigad power station in Maharashtra, must face the harsh reality that high LNG prices could scuttle its best laid plans.

Raigad might have to be mothballed unless the Rangarajan committee's gas pooling policy brings down LNG prices, believe sources. Yet Hyderabad-based Pioneer is unfazed and is talking to GAIL to source 1.7m cm/d for the upcoming power station.

GAIL is likely to offer spot LNG at $15/mmbtu to $16/mmbtu ex-ship which Pioneer can use to test the power station. Pioneer is also eyeing a medium-term LNG contract with GAIL for its power generation needs, which it wants to finalise in November.

“We are in advanced talks,” confirms Pioneer. GAIL is laying an 8-km pipeline to supply gas to the power station.

Only a 600-metre stretch remains. “We began ‘lube oil flushing’ the turbines in September,” adds Pioneer.

“If we have gas we can commission by end-December. Contracts are in place to sell around 50% of generated power to factories nearby.

” Some doubt Pioneer’s sincerity, saying it is pushing to complete the power station to meet its contractual obligations, even though it knows it is unlikely to make money producing power with imported LNG. Pioneer was counting on LNG prices falling to between $12/mmbtu and $13/mmbtu by January 2014, but that hasn't happened.