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Gas-hungry power companies now refuse to take allocated fuel

business Updated: Apr 28, 2014 07:21 IST
Anupama Airy
Anupama Airy
Hindustan Times

In a contradiction of sorts, most power producers in the country who have been complaining about gas shortages leading to idling of their projects are now seen refusing to accept the gas allocated to them, saying demand for power was dipping.

The trend has worried state-owned natural gas retailer and transporter, GAIL (India) Ltd, which has raised an alarm before the government about the trend which has resulted into operational problems due to accumulation of this unutilised gas in its pipelines.

State-owned NTPC, India’s largest power producer, is the biggest defaulter that has refused to take delivery of gas, and has cited lack of demand for gas-based power for this rejection.

In its recent letter to the petroleum ministry, GAIL said gas off-take by power sector allottees is much lower as against their allocated contracted quantity, with NTPC being a “major defaulter customer.”

GAIL also said that when domestic gas price is hiked, the off-take of domestic gas by these power sector consumers may further drop. Its observation was based on current gas off-take levels of power sector customers and on feedback received from them during interactions.

Accordingly to GAIL, the situation is “resulting in huge accumulation of gas in GAIL’s pipeline system causing serious operational problems.”

“The average gas (APM) off-take during 1st fortnight of March’ 2014 by NTPC plants was 4.74 MMSCMD (million metric standard cubic metres per day — the unit of measurement for natural gas) against their combined APM nomination of 6.68 MMSCMD, resulting in average spare quantity of around 1.95 MMSCMD of APM gas in the system,” it said.

“We produce electricity based on demand and our agreements with state power companies to purchase gas… there is presently no demand and generation from even coal-based plants is being backed down… gas-power plants too are witnessing the trend and without demand, off-take of gas is of no use,” said a NTPC official seeking anonymity.