The Hindu Business Line : NTPC tender may set benchmark for LNG pricing

THE much awaited detailed tender of National Thermal Power Corporation(NTPC) for supply of 3 million tonnes per annum of gas to two of its power plants in Gujarat is expected in the second week of August. The tender and subsequent price bids could well set the benchmark for liquefied natural gas(LNG) pricing in the country.

The major players in the business of importing LNG into the country are understood to be pretty keyed up as this could well lead to the submission of price bids by September.

The present price of gas in Gujarat at the delivery point, as supplied by the Gujarat State Petroleum Corporation (GSPC) is around $4 per MBTU(million british thermal units).

That could well change as the Gujarat Government proposes to reduce the sales tax on natural gas from 20 to 12 per cent and the Central draft policy on LNG has indicated that all States should levy only 4 per cent tax at the landed point. Expectations are that gas price is likely to hit the downward spiral and settle at around $3.5 per MBTU.

NTPC first came out with its long-term tender for the supply of 3 mmtpa LNG in February 2002.

This was to fuelfour of its plants, Gandhar and Kawas in Gujarat , Auriya in Uttar Pradesh and Anta in Rajasthan.

At that time, it was indicated that the capacity expansion could come by way of 650 MW at all the four sites, adding up to 2,600 MW .

Significantly, the relative health of at least three LNG terminals that are coming up in Gujarat would hinge on the outcome of the bid as they figure among those shortlisted by NTPC in the pre-qualification stage.

These include Petronet LNG(Dahej), Shell(Hazira) and British Gas(Pipavav).

The other three in the fray are Exxon Mobil, TotalFina and Reliance, the last named being the only company that may be in a position to supply natural gas to NTPC.

On offer is a guaranteed demand for nearly 14 million cubic metre of gas per day (3 mmtpa) - a requirement that could easily justify the speedy completion of at least one LNG terminal in Gujarat.

Clearly, the future of some of these terminals hinges on the outcome of this single tender.

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