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Import of natural gas to operate power plants

Import of natural gas to operate power plants

The decline in the supply of natural gas from Reliance Industries’ (RIL) KG D6 basin to gas-based power plants may prompt these units to import costly
R-LNG to operate their facilities.

Anticipating sufficient gas availability, power producers set up a substantial amount of gas-based power capacity in recent years.

But with a drop in output from the largest gas fields (Reliance Industries operated KG D6), almost 24,000 mw of power capacity, or Rs 100,000 crore of power investments are stranded, official data shows.

Analysts feel that the government must provide subsidy to make such power projects economically viable for the producer. In order to reduce the impact on the end consumer, options such as price pooling across power sector – gas, coal, hydro etc – will be required.

Earlier, the power ministry issued an advisory to power developers not to plan projects till 2015-16. At present, most of the gas from KG D6 gas is consumed by the fertiliser sector. The block is producing less than 14 million standard cubic metre a day (mmscmd) and this is expected to dip to 11 mmscmd. It is expected to increase to 19 mmscmd during first quarter of 2015 and remain at this level till 2016-17.

Additional domestic gas will be available largely from 2014-15 from fields of ONGC, Oil India and GSPC.

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