Pool price mechanism may help Kerala tide over gas blues

Though cost may remain a key constraint, the efforts of the Union Ministry of Finance to pool prices of imported and home-grown natural gas,

Published: 06th November 2013 12:33 PM  |   Last Updated: 06th November 2013 12:33 PM   |  A+A-

Though cost may remain a key constraint, the efforts of the Union Ministry of Finance to pool prices of imported and home-grown natural gas, will be beneficial for the state, which has plans for gas-fired power projects.

 The Kerala State Electricity Board (KSEB) has already submitted an application for the allotment of domestically produced natural gas for its plant at Brahmapuram, with a capacity of 350-475 MW. The board had recently floated tenders for carrying out the Environment Impact Assessment (EIA) study for the project.

 At present, gas-based power generation projects in the country with a capacity of 7,800 MW is hit by inertia due to scarcity of natural gas.  KSEB Chairman M Sivasankar said that though the pricing of natural gas will be a challenge “the move will be beneficial for mega power projects using this fuel”. A clear picture will be emerge once the ministry finalises guidelines for the pooling of prices, he said.  Last month, the Power Ministry issued a cabinet note seeking approval to pool imported Liquefied Natural Gas (LNG) with the fuel available from the KG-D6 block, after meeting the requirements of fertiliser units. The idea is to help gas-starved power plants. The proposal will be finalised once the Ministry of Finance agrees to provide the subsidy.

 As per the proposal, during 2014-15, about 3,000 MW capacity power plants will get gas under the gas-pooling mechanism.

 The electricity produced from these plants is likely to be sold at a tariff of `7 per unit.  “In the beginning, the state will not be benefited, but it will help us in the long run,” Sivasankar said.

The proposed power plants in the state using gas as fuel are Puthuvype (1,200 MW), Brahmapuram (1,050 MW), Kayamkulam power plant expansion (1,050 MW), Cheemeni (1,200 MW), conversion of Kayamkulam plant stage 1 (350 MW) and conversion of BSES plant in Kochi (165 MW). The requirement of the state will be five million standard cubic metres per day (MMSCMD). The price of KG-D6 gas was set at $4.2 per Million British thermal units (MBtu) by the government and is proposed to be doubled from April 2014. LNG costs about $13-14 per mmBtu


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