More delay before Karnataka invites Bidadi gas bid

Vol 8, PW 10 (11 Aug 04) Midstream & Downstream

Expect more delay in Karnataka Power Corporations schedule to invite price bids for gas to fuel the proposed 1,500-MW Bidadi power station.

KPCL is now processing the final Request for Proposal document before approval by the board. We have completed our internal assessments of the bidders deviations and have taken a view on almost all the issues raised, a source in Bangalore tells us.

By the middle of this week, KPCL plans to send the final RFP document with all amendments to three bidders: Reliance (natural gas); Petronas, BP, Indian Oil (LNG); and Petronet-LNG, BPCL, ONGC (LNG). After this theres no scope for any change.

Bidders will be asked to submit price bids within three weeks of the date they receive the final RFP documents. Technical evaluation is over, he adds.

Once we have the price bids well open them and issue a Letter of Intent before signing the contract. Things have been delayed by a month but in a big tender like this a month is no big deal.

KPCL is confident it can receive first gas by 2007 and is certain it will receive competitive bids. Thanks to the (NTPC) Kawas and Gandhar tender everybody knows the benchmark price of gas in India, says our source.

Its up to bidders to take a call on how close theyll price their gas to the offer NTPC received. KPCL reminds bidders that 1.6m t/y gas over 15 years for Bidadi is substantial.

Its not that at the end of 15 years we will stop generating power from Bidadi, he adds. We can extend the (gas supply) arrangement by mutual agreement beyond that period.

Once bidders lay facilities they might want to continue the relationship. KPCL might increase Bidadi generating capacity by an additional 700-MW but it still needs board approval.

We will indicate this possibility in our covering letter (with the RFP). We have sounded out the bidders about this and they seem comfortable.