Vol 3, PW 11 (23 Jun 99) Midstream & Downstream

Rangarajan Kumaramangalam, Minister for Power, makes no secret of his unhappiness with the slow progress of the Ennore LNG project, promoted by the Tamil Industrial Development Corporation (TIDCO).

In an informal meeting with a correspondent for this report, the power minister casually evinced "disgust" at the slow pace in finalising a deal. The minister has reason to be worried.

The fate of a nearby 1000-MW proposed coal-fired power plant at Cheyyur - backed by National Thermal Power Corporation (NTPC) - is linked to TIDCO progress at Ennore. Kumaramangalam tell this report he wants to switch feedstock at Cheyyur from coal to surplus gas from the TIDCO project at Ennore.

He adds that he would like to formally double capacity at Cheyyur to 2,000-MW when the TIDCO project is seen to be making concrete progress. Like most in India, Kumaramangalam recognises the advantage of gas over coal as an environmentally friendly fuel for the power sector.

His complaint of slow progress at Ennore is significant. First, it runs counter to official announcements that negotiations with the Siemens-led consortium are progressing well.

Second, it confirms continuing doubts on the viability of the project, voiced strongly by a source at the Tamil Nadu Electricity Board (TNEB). Tamil state officials, meanwhile, rebut any suggestion that negotiations with the Dakshin Bharat Energy Consortium are stalled.

One source tells this report the last three months has seen progress in a Pre-PPA (Power Purchase Agreement) round. He adds the only hiccup arose when project contractors suggested changes in the tariff structure to "smoothen the curve", ie.

to average out the electricity tariffs which in the early years is seen to be too high and in future years too low.