NTPC tells Petronet to cut LNG price

NTPC Ltd. | Power Generation/Distribution | Power | BSE: 532555 | NSE: NTPC

18 Feb 2011 Evaluate

With four state governments conveying their unwillingness to sign power purchase agreements (PPAs) with NTPC Ltd for its Kayamkulam power plant in Kerala, the biggest power generator in the country has sought long-term pricing comfort from Petronet LNG Ltd (PLL). NTPC has told the LNG importer it cannot sign a gas sales purchase agreement (GSPA), since the cost of power works out to be high and states are unwilling to sign PPAs at that rate.

Signing of a GSPA with NTPC is crucial for PLL’s Kochi regasification terminal, some 120 km away from the power plant, since it provides a surety of off take to the marketers of regasified LNG (RLNG). Besides Puducherry, NTPC had approached Tamil Nadu, Andhra Pradesh, Kerala and Karnataka for selling power from its 1,030-Mw, Stage II of the project but have not signed (GSPA) because at that very high rate of LNG, that for power is coming to Rs 8 a unit.

NTPC buys around 15.5 million standard cubic metres a day (mscmd) of gas, of which 4-5 mscmd is RLNG and the remaining domestic gas. At an average cost of around $7 per mBtu, the power rate works out at Rs 5 a unit. NTPC is currently buying RLNG at $10-16 per mBtu from PLL’s Dahej terminal, depending on whether it is spot or long-term LNG.