Uncertainty over pricing formula delays Bidadi RFP

Vol 8, PW 12 (08 Sep 04) Midstream & Downstream

Karnataka Power Corporation has again delayed the schedule to issue final Request for Proposal (RFP) documents to Bidadi gas bidders.

Earlier plans to send out the final RFP document mid-August have been put back to mid-September. Why the delay There are certain issues about the pricing formula which are being detailed in the final document, a Karnataka source tells PETROWATCH.

The technical committee is now working on this. KPCL wants bidders to submit price bids within two weeks of receiving the final RFP document.

If everything goes to the present schedule, and if the bidders do not ask for more time KPCL expects to sign the 15-year, 1.6m t/y gas supply contract sometime towards the end of October. After that there will be a 12 month period so that the various conditions precedent can be fulfilled.

KPCL is using the present delay to work on other elements of the 1400-MW Bidadi power project, such as the Power Purchase Agreement. This is being drafted now.

Current plans are to sell the entire electricity to state-owned Karnataka Power Transmission Company. We may also decide to sell a portion of the electricity to (state-owned) Power Trading Corporation.

Even if work is speeded up, KPCL feels the project will get delayed and will spill over to Indias 11th five-year plan from 2008. Delhi has been pressurising us to have at least one block (700-MW) commissioned at Bidadi by the end of the 10th five year plan (2007), but that looks out of reach now.

Continues our source: We have only 30 months left. This is too tight.

KPCL says it may be able to compress the EPC schedule to 30 months, but not the gas supply schedule. Even the natural gas supplier wants a minimum 36 months to begin supplies.

If the LNG supplier wins the tender it will take even longer. The earliest possible that we can commission the first block is sometime in 2008.