Rashtriya Chemicals and Fertilisers (RCF) has come to the rescue of fuel-starved power stations of Andhra Pradesh, which were facing a shutdown after gas supplies from the KG-D6 block stopped. Following an oil ministry decision, RCF has decided to divert a portion of its domestic gas allocation to the private power plants in Andhra Pradesh under a swap arrangement. RCF?s fuel needs would be met through imported LNG supplies from GAIL India Ltd.
Sources said the oil ministry has already issued orders for swapping RCF?s gas allocation and the process has been initiated. Under the arrangement, 2.1 million standard cubic metres per day of KG-D6 gas allocated to RCF?s Thal urea manufacturing plant in Maharashtra will be diverted to Hyderabad-based Bhagaynagar Gas Ltd (BGL) and power plants in Andhra Pradesh. This will immediately benefit the power plants that are without any gas from the KG D6 block. RIL has stopped all gas supplies to power projects as production from its Andhra block has declined sharply over the last several months. KG-D6 output has hit fresh lows of 12.88 mmscmd last week.
Under the gas swapping arrangement, the state-owned GAIL India will supply imported liquefied natural gas (LNG) to meet the shortfall at RCF?s Thal urea manufacturing plant. However, the swap will remain restricted to gas supplies while the high prices of imported LNG will continue to be borne by power producers. RCF will be liable to pay only $4.2 per million British thermal unit(mmBtu), the rate at which it had contracted with KG-D6 gas.
?The arrangement made is purely temporary and need-based and would not have any impact on allocations and the beneficiary would not make any claim on such gas against the facilitator,? said a government official privy to the development.
GAIL on its part has said that it would not be making any financial gain, attributable to swapping of gas through RCF. ?GAIL is only charging marketing margin on account of
sale of RLNG to consumers,? the official added.
The arrangement would work for both the customers as it would ensure uninterrupted supply of gas. It would also optimise the gas transportation charges that would have been higher in the absence of such an arrangement. Inadequate gas transportation infrastructure would have added up to the cost of making LNG supplies to power projects in Andhra Pradesh through the pipeline extending from far away coastal regions in Gujarat and Maharashtra.
In the current arrangements, the BGL, Andhra power plants, GAIL, RGTIL, RIL and RCF Thal would have to enter into commercial agreements to operationalise the swapping. ?The above swapping arrangement is subject to the condition that RCF will not have any additional financial burden and any additional financial implication,? sources said.
Sources said with KG-D6 output hitting fresh lows, there was hardly any gas left after meeting the requirement of urea manufacturing plants, which had been given top priority in fuel receipt. This has led to many power plants in Andhra Pradesh shutting down or operating at sub-optimal capacities.
