Govt to ink gas deals in Gulf to revive power plants

NEW DELHI: In a bid to fuel stranded gas-based power projects the government is negotiating long-term

contracts with leading gas suppliers in the Gulf region.

The plan is to enter into contracts for importing 70-80 million metric standard cubic metres (mmscmd)

of natural gas through long-term contracts of 10-15 years and at affordable rates. Given the price

sensitivity of fuelling a power project, the government wants these contracts at around $5 per unit

(million British thermal unit or mmBtu).

“With excess coal-based power available at a little over ` 2 per unit, the cost of fuel to power plants is

the most important factor and so the government’s effort and insistence on long-term gas purchase

agreements at low costs,” said a government official.

During his recent visit to Qatar and other Gulf countries, oil minister, Dharmendra Pradhan had re-

negotiated contracts for importing gas, bringing down the price from as high as $16 per unit to less than

$5 per unit. A source said that the government is unlikely to pay over $5 per unit of gas, keeping the

global slide in prices in mind. Discussions with Oman and Iran are underway.

A 2015 internal government report showed that power projects worth ` 50,000 crore were stranded due

to lack of gas linkages and warned that these would turn into non-performing assets.

Sources said that the issue has already been discussed and approved by the Prime Minister’s Office. PM

Narendra Modi’s forthcoming to Iran will further discussions on these contracts.

“In the interest of power for all and to ensure that investments in idle plants don’t turn bad, the

government is trying to provide costeffective linkages” said a source.

NGS INDIA