Date:21/07/2004 URL: http://www.thehindubusinessline.com/2004/07/21/stories/2004072102701900.htm

Back Restore full gas supply to private power projects: AP Govt

Our Bureau

As against the allocation of 4.85 MCMD, the actual quantity of gas supplied to the four IPPs in 2003-04 was 3.68 MCMD.

Hyderabad , July 20

THE Chief Minister, Dr Y.S. Rajasekhara Reddy, has urged the Union Minister of Petroleum and Natural Gas, Mr Mani Shanker Aiyar, to direct the Gas Authority of India Ltd (GAIL) and the Oil and Natural Gas Commission (ONGC) to augment gas supply as per the agreed allocations to the existing independent power projects (IPPs) and the new power plants scheduled to be commissioned in the State by May 2005.

In a letter to Mr Aiyar, the Chief Minister pointed out that the existing four gas-based IPPs in the State were being operated at less than 70 per cent of their rated capacity due to short supply of natural gas from GAIL.

As against the allocation of 4.85 MCMD, the actual quantity of gas supplied to the four IPPs (GVK, Spectrum, Lanco and BSES) in 2003-04 was 3.68 MCMD.

Consequently, Dr Reddy said, there were power shortages in the State.

The consumers had to pay higher power tariff due to increased cost of power procured from alternative sources and payment of full fixed charges for the entire capacity of 999 MW of the IPPs, even though the energy produced by them was restricted due to inadequate gas supply.

The Chief Minister stated that four more gas-based IPPs would come into operation in the State in 2005 and 2006, with a combined capacity of 1499 MW.

GAIL had entered into an agreement with these IPPs also for a firm allocation of 6.30 MCMD and a fall back of 0.40 MCMD, totalling 6.70 MCMD. However, as per the production profile of ONGC, gas availability in Krishna-Godavari basin was estimated to decline progressively.

Once the new IPPs commence commercial operations in 2005-06, Dr Reddy said, the Transmission Corporation of AP (APTransco) would have to pay full fixed charges for the entire capacity even if gas was not supplied.

This would lead to an unjustified burden on the consumers of the State. Hence, he wanted Mr Aiyar to direct GAIL and ONGC to ensure gas supply to the IPPs as per the agreed allocations.

In another letter to Mr Aiyar, the Chief Minister stated that as per the agreements, APTransco was paying full fixed monthly transportation charges to GAIL irrespective of the quantity of gas supplied.

This, he felt, "is an unjustifiable and one sided arrangement which needs to be reviewed".

The Chief Minister said that GAIL continued to collect transportation charges as per the agreement even though it had recovered the capital cost incurred towards establishment of the transportation network for the four existing IPPs.

The APTransco had so far paid Rs 115.77 crore towards gas transportation charges to GVK, Jegurupadu, Rs 102.91 crore to Spectrum, Rs 212 crore to Lanco and Rs 58 crors towards gas transportation charges to BSES (Reliance Energy).

Dr Reddy sought Mr Aiyar's intervention for working out an equitable arrangement of transportation charges based on gas actually supplied by GAIL.

He said that the pricing methodology should also take into account the capital costs already paid, so as to reduce "unjustifiable costs being passed on to the end consumer".