Spectre of آ‘LNG lobbyآ’ hangs over Karnataka

Vol 3, PW 24 (22 Dec 99) Midstream & Downstream

Behind the quarrel between Cogentrix and the Indian government lies a more pressing question: Is there an LNG lobby active in India If yes, is this lobby responsible for sabotaging the Cogentrix project and any like it that prefer cheaper coal to LNG for power plants One analyst clearly believes so, and points an accusing finger at two multinationals who he says have a vested interest in seeing the companys project in Mangalore die: Enron and British Gas.

The argument goes like this: coal-fired power plants produce cheaper electricity than LNG-fired power plants. It is therefore in the interests of the (alleged) LNG lobby to kill off Cogentrix.

Reason: Cogentrix is the lowest cost 1,000-MW project in India a fact recognised by the Central Electricity Authority (CEA). It planned to sell power at Rs2.51 kw/h at current project costs of Rs5,106 crore ($1.2bn).

By contrast, the cost of power from plants fired by LNG is significantly more expensive at around Rs4 kw/h. The problem with this conspiracy theory is manifold.

First, it is difficult to see why British Gas would care about what happens in Karnataka. The UK company has already stated that Gujarat is its focus area.

Second, it is difficult to see how LNG importers in India could unite to form a lobby when they spend most of their spare time criticising each other. With Enron its another matter.

These days Enron is telling anyone who wants to listen that it is aggressively targeting Karnataka for the export of surplus LNG from Dabhol, when first supplies land in 2001. Enron is also linked to plans to revive the port of Mangalore as an LNG hub.

Its an unfortunate coincidence that Cogentrixs proposed coal-fired power plant is located at a place called Padubidri, some 35km north of Mangalore. Conspiracy theorists suggest Enron - eager to acquire the site that Cogentrix has for its power plant wants to see Cogentrix out of India.