Expect another spot gas tender from NTPC on Friday

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

NTPC is clearly enjoying issuing tenders for gas! PETROWATCH learns the countrys foremost power generation company is set to issue another tender tomorrow (Friday) for a spot gas requirement at its Kawas, Gandhar, Faridabad, Dadri, Anta and Auraiya power stations.

Most likely, the tender will be out tomorrow (Friday), says an industry source. The terms and conditions will be the same as in the previous NTPC tender.

NTPC will reveal only how much gas it needs and where it is to be supplied. Prospective bidders must mention how much gas they can offer and for how long.

We will indicate our requirement and ask for the delivered price, says a source. This will be the fourth spot gas tender from NTPC since the first one was launched in May 2006.

GAIL, Shell and Bharat Petroleum won the first tender separately, each supplying R-LNG at around $10.2 per mmbtu. GAIL and BPCL finished supplying their allocated quantities between the first week of June and mid-July while Shell will finish its contract by 31st October.

The second spot tender was floated in early July and won by GAIL at $10.30 per mmbtu for supplies by 31st August. This will be a regular feature from us, says our source.

We require about 4m cm/d and we are aware that spot cargoes are being imported. Adds our source: We never get our full requirement from importers and suppliers.

This is because NTPC is unwilling to enter into long-term or short-term purchase commitments and prefers to buy on a spot basis. NTPC likes this business model because it gives flexibility to both buyer and seller.

Importers know we have a certain requirement, says our source. They are also aware of requirements by other buyers.

They take a call on this by signing up with several definite customers and by giving us the un-committed quantities. When there are several offers, NTPC awards contracts in ascending order of price, based on the quantities and period of supply of each offer.

The cost of gas is a pass through for us. We are committed to producing power as cheaply as possible.

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