In a bid to kick-start majority of the stranded gas based power projects in the country, the government is discussions with leading global gas suppliers in the Gulf region to contract at least 70 to 80 million metric standard cubic metres (mmscmd) of natural gas through long-term contracts between 10-15 years and at affordable rates.
Given the price sensitivity of the power sector, the government is negotiating these long term contracts in the price range of $5 per million British Thermal Units (mmBtu).
“The government is ready to contract at least 70 to 80 million metric standard cubic metres (mmscmd) of natural gas from global suppliers if they are ready to supply long-term at affordable rates, which will enable India to operate its idle gas-based power capacity,” Power, Coal and RE minister, Piyush Goyal said on May 11th.
Out of the 24,000 mw of stranded projects, Goyal had recently told EnergyInfraPost that 11,500 mw have already started generating power and the rest will also be supplied affordable gas to start generating electricity.
Prime Minister Narendra Modi’s recent visit to Saudi Arabia and forthcoming visit to oil and gas rich nation, Iran will also facilitate discussion on these contracts. With the lifting of nuclear sanctions on Iran, PM Modi is expected to ink the much awaited commercial contract for India’s participation in the Chabahar port, a move that will open a Pandora box of investment opportunities for companies across the globe. India is also keen to build a rail link between Chabahar port and Zahedan that will link Delhi with Iran’s rail network.
Sources in the Prime Minister’s Office (PMO) said a blueprint has already been readied to sign these contracts and fuel stranded gas based power projects.
Then, during the recent visit of petroleum minister Dharmendra Pradhan to Qatar and other countries in the Gulg region, re-negotiation of existing contracts have seen prices of gas fort India coming down from the earliar highs of $16 per mmbtu to less than $5 per mmbtu. “Similar long term contracts are being negotiated that will enable India to operate its idle gas-based power capacity.”
Pradhan had recently told the Parliament that earlier the gas prices during 2015 were in excess of $12 per mmBtu. “The current price applicable under the contract (with RasGas of Qatar) works out to less than $5 per mmBtu based on prevailing crude prices,” he said in a written reply to a question in the Lok Sabha.
This revision, applicable from January 1, has led to making LNG cheaper for the end consumers, he said.
Currently, Writing a Book for Penguin India Titled Greased Pole:How Politics and Lobbying Stifled India’s Energy Dreams. The author can be reached on email@example.com (9810661825)
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