GAIL beats Shell and IOC to win NTPC gas tender

Vol 10, PW 12 (05 Oct 06) Midstream & Downstream

GAIL has won its second successive gas contract from state-owned National Thermal Power Corporation.

PETROWATCH learns that on 30th September, NTPC issued a Letter of Intent to GAIL for the supply of 30m cubic metres gas in 30 days. On 3rd October, GAIL began supplies of regassified LNG imported by Petronet-LNG at Dahej and is supposed to supply NTPC the entire quantity by 2nd November.

NTPC wants the gas for its Kawas and Gandhar power stations in Gujarat and for the Anta, Auraiya, Dadri and Faridabad power stations that supply Delhi. On an average, the supply works out to around 1m cm/d, but GAIL is not obliged to supply any particular quantity every day, says a source.

If they wish they can supply more than 1m cm/d and satisfy the contract before 2nd November. GAIL is believed to have quoted between $11.5 and $12.4 per mmbtu inclusive of taxes and transportation charges; depending at which power station the gas is delivered.

The price varies from power station to power station, we hear, because of transportation costs. Shell, Indian Oil and Bharat Petroleum also bid but BPCL did not submit a price and NTPC rejected bids from Shell and Indian Oil because of unresolved differences over terms.

Both of them wanted major deviations from the tender terms, we understand, NTPC was in no mood to oblige. GAIL has an advantage over its rivals because it owns the HBJ pipeline and can deliver gas to the Delhi gate.

NTPC issued this tender on 8th September and wanted to open price bids and announce the winner by 14th September. But negotiations with Shell and Indian Oil delayed the award, first to 15th September, then to 22nd September.

Finally the LoI was issued on 30th September. We took much longer than expected, we are told.

Usually, we award these contracts within a week of the tender.