Jain of NTPC stands firm on $3 price for LNG

Vol 7, PW 6 (04 Jun 03) Midstream & Downstream

COMPANIES IN the race to supply 3m t/y LNG or natural gas to NTPC will be disappointed to hear that it has no intention of backing down on its demand for a burner tip price of $3 per mmbtu or less.

Talking to this report, NTPC chairman C P Jain said: "We will be forced to reject any bid if it quotes a price of more than $3 per mmbtu. Repeatedly, Jain stressed that: "It has been made aptly clear to all the bidders that even a cent more than $3 per mmbtu will increase our per unit generation cost of electricity and make it unviable.

He added that for NTPC to accept anything more than $3 per mmbtu would be the economic equivalent ofcommitting suicide, given the bankrupt condition of Indias state electricity boards and their inability to pay for the electricity they buy. Jain hinted that many LNG suppliers are bluffing when they insist that LNG at $3 is unrealistic.

He argues that NTPC's internal calculations prove it is possible for suppliers to offer gas at less than $3 per mmbtu. We want to mitigate our own risk," he added.

Another senior official from NTPC confirms that the company bases its $3 figure on the fiscal concessions that LNG importers will receive under the proposed 'Integrated LNG Policy' still under review with the government. Responding to criticism that the deadline for price bids is too early, Jain confirms that NTPC would open the price bids in late August after technical and commercial evaluation of the bidders.

"No firm date has yet been set," he said. We are examining the bidders concerns with an open mind and mayinclude some suggestions in the final agreement being framed by our lawyers.

At the pre-bid meeting in Delhi on 15th and 16th May, bidders unanimously sought an extension of the 3rd June deadline for submission of price bids.

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