Future of LNG projects not so rosy

Published: 29th July 2013 12:26 PM  |   Last Updated: 29th July 2013 12:26 PM   |  A+A-

It seems that the future of the proposed electricity generation projects, six in number, to be powered by Liquefied Natural Gas (LNG) is not quite perfect, as far as the state is concerned. The major reasons cited against the projects include a steep fall in INR, hike in domestic gas price and its non-availability, lack of long-term contracts to ensure LNG’s availability at cheaper prices, patchy natural gas networks and the high cost of power generated from LNG plants. Experts point out that, considering the current price of natural gas, which hovers around $14 per MMBtu, the per unit cost of power from the proposed plants would be around Rs 9, which is considered costly.

Kerala has plans to produce 5,015 MW of power in total from the power plant projects located at Puthuvype (1,200MW), Brahmapuram (1,050MW), Kayamkulam (1,050MW), Cheemeni (1,200MW), the converted Kayamkulam plant stage 1 (350 MW) and the converted BSES plant in Kochi (165 MW). The total LNG requirement for the projects would be around 6.25 MMTPA.

“Owing to many reasons, the proposed LNG-based power projects are moving at a snail’s pace. The main reason is the unavailability of fuel at cheap rates. It is high time the govt intervened and took steps to implement at least some of the proposed projects,” said M P Sukumaran Nair, director, Centre for Green Technology and Management. He said that the non-implementation of LNG power projects would prove a burden on the state, as the present average peak demand is 3,348 MW and availability only 3,312 MW. The state needs an additional supply of 1,357 MW by 2017. To make matters worse, the latest report by the Central Electricity Authority (CEA) states that Tamil Nadu, AndhraPradesh, Kerala, Karnataka and Puducherry will witness a power deficit of 26.1 per cent, or 11,669 MW during 2013-14.

“The pricing of gas is the obstacle that stands in the way of  theprojects. The govt should ensure 50 pc of the domestic gas supply to these plants to make them feasible,” an official at KSIDC, which is implementing the Cheemeni project said. India imported 15.17 million tonnes of LNG in 2012. This is expected to rise to 50 million tonnes by 2020.


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