A new study on gas regulation in India

Vol 4, PW 3 (15 Mar 00) Midstream & Downstream

Less controversial was an announcement by the TDA that it plans to pump money into a study of the gas regulatory environment in India, with particular reference to Tamil Nadu.

It is not entirely clear who will receive the $323,000 grant. But if and when it is cleared, it will be money well spent.

The lack of a gas regulatory framework in Tamil Nadu - as elsewhere in India - is one of the principal complaints of foreign investors setting up LNG terminals. Ask Wayne Lepire of CMS Energy.

Lepire describes it as one of three vital ingredients needed to ensure financial closure of an integrated LNG and power project. Speaking in Kathmandu, Lepire criticised the lack of clarity between the role of national and state regulators, a concern echoed by LNG multinationals in western India.

But what exactly will the TDA survey research A senior government oil official privately admitted to this report it is an issue that needs addressing but added: "Can somebody tell me what is there to regulate" Lepire could probably tell him a thing or two. In December 1998, the Dakshin Bharat Energy Consortium, which includes CMS, won a tender promoted by the Tamil Nadu Industrial Corporation (TIDCO) to set up an integrated 1,850-MW power plant and 2.5m tonnes a year (t/y) LNG receiving terminal at Ennore.

Since then, Dakshin has struggled to sign a Power Purchase (PPA) with the Tamil Nadu Electricity Board (TNEB) and worse, faces the prospect that the state government will renege on a promise to provide escrow cover. Lepire said "payment security" is the second of the three major obstacles to financial closure.