Vol 3, PW 16 (01 Sep 99) People & Policy

Several power projects in Tamil Nadu are expected to benefit from an imminent government move to reallocate naphtha supplies.

Until now Indias oil ministry has a policy to allocate naphtha sufficient to generate 12,000 MW of power across various states in the country. This figure is now likely to increase beyond 12,000 MW, as India acquires the status of a naphtha surplus country and the government revises its past hostility to the use of naphtha as a feedstock for power plants.

A decision has also been taken to strip a number of failed power projects of their naphtha fuel linkage and redirect the fuel to proven proposals which have either achieved financial closure or are near to achieving it. Among the principal winners of this reallocation will be Tamil Nadu, following a request to the Indian oil ministry by the Tamil Nadu Electricity Board (TNEB) for a significant hike in the states naphtha allocation.

One immediate beneficiary is likely to be the Ashok Leyland-Fiat Avio (of Italy) combine which won four projects in a competitive tender floated last year by the Tamil Industrial Development Corporation (TIDCO). The four projects total a combined 910-MW.

Ashok Leyland (a truck manufacturer which belongs to the London-based Hinduja Group) now hopes to shift all four projects to Ennore, near the 1,800-MW power projects and associated 2.5m tonnes a year (t/y) LNG receiving terminal to be constructed by the Siemens-led Dakshin Bharat Energy Consortium. This report learns Ashok Leyland will be granted sufficient naphtha allocation in place of the condensate which it was promised earlier.

When Dakshin Bharats LNG terminal becomes operational, the project will switch to gas.