Date:14/07/2005 URL: http://www.thehindubusinessline.com/2005/07/14/stories/2005071403090100.htm

Back ONGC forays into power, to set up project in Tripura

Anil Sasi

While ONGC would hold majority stake in the venture, it is in talks with PTC to subsequently pick up a minority stake in the SPV.

New Delhi , July 13

OIL and Natural Gas Corporation (ONGC)would mark its foray into the power sector by setting up a 750-MW wellhead-based gas station in Tripura.

The state-owned oil major has set up a special purpose vehicle (SPV) named Tripura Power Development Company Pvt Ltd for developing the station next to one of its gas fields that is currently not in use commercially, Government sources involved in the exercise said.

ONGC has signed up IL&FS to advise it on the new venture and the responsibility for the offtake of the power generated by the project has been entrusted to the state-owned power utility, PTC India Ltd (PTC).

PTC is in talks with a number of northern and north-eastern States, which have evinced keen interest in buying power from the project, officials said.

While ONGC would hold majority stake in the venture, it is in talks with PTC to subsequently pick up a minority stake in the SPV.

Preliminary talks have also been initiated with financial institutions for raising debt for the project.

According to officials, while the tariff details are still being worked out, the project would be "extremely viable" commercially. The generation tariff would largely depend on the mechanism deployed for the pricing of the gas, which is being worked out. "The two options being considered include ONGC providing gas on a conversion basis (i.e. price of gas would be worked out backwards once the power price is determined) or selling gas directly to the SPV at a pre-decided price," an official said.

The Tripura project would be a step in ONGC's efforts at horizontal integration across the energy value chain.

According to sources, the company is bullish on developing more wellhead power stations at gas fields where transportation of gas is not economical. The company had earlier said that it was weighing the option of setting up an LNG-based station at Mangalore.