Financial Daily from THE HINDU group of publications
Tuesday, Aug 12, 2003
Financial Daily from THE HINDU group of publications Tuesday, Aug 12, 2003 |
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Corporate
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Alliances & Joint Ventures Industry & Economy - Petroleum TIDCO to sign gas pact with GAIL soon N. Ramakrishnan
Chennai , Aug. 11 TAMIL Nadu Industrial Development Corporation (TIDCO), a State Government undertaking, is all set to sign a gas cooperation agreement with GAIL (India) Ltd, a Government of India undertaking. The agreement, expected to be signed later this month, is to examine the feasibility of creating a gas grid for the State as also assess the availability of gas both within the State and in the southern region. It may be recalled that the Chief Minister, Ms J. Jayalalithaa, at a meeting organised by the Federation of Indian Chambers of Commerce and Industry here last month, had mooted the idea of a gas grid for the State and also mentioned a likely gas cooperation agreement with GAIL. The agreement will help arrive at concrete figures on gas availability within the State and also look at other areas from which gas can be tapped. As it is, according to sources, two gas fields are coming up for exploration in Tamil Nadu under the Centre's New Exploration and Licensing Policy. The agreement will help look at what kind of infrastructure will be required to create a gas grid, the feasibility of doing so, and the likely cost. Besides, it is also expected to come out with a regulatory structure for the gas sector in the State, assuming that the gas grid can be created, according to sources. Currently, gas reserves in Tamil Nadu are limited and the available gas in the Cauvery basin is being supplied for power generation, mainly to the Tamil Nadu Electricity Board and to a private power producer. The Government is keen that the gas grid comes up, as it is a cheaper source of fuel for power generation and also a much cheaper feedstock for fertiliser plants, now running on naphtha. It may be recalled that TIDCO had assessed the demand for gas in Chennai and within a 200-km radius of the city a few years ago when it had called for international bids for a 2.5 million tonne per annum gas terminal and a 1,800 MW power plant. A number of industries had evinced interest in sourcing gas, including the Madras Fertilizers Ltd, which proposed to switch over to gas as feedstock from naphtha. The additional demand for gas within a 200-km radius of Chennai had then been estimated at around two million tonnes per annum. TIDCO had also obtained a $3,32,620 grant from the US Trade and Development Agency in June 2000 to carry out a natural gas regulatory study. This study has since been completed. However, the proposed LNG project is yet to take off. The US TDA-funded study was conducted by an independent consultant to estimate the demand for natural gas; establish technical, legal and safety issues that should be incorporated in a gas regulatory regime; define initial and refined regulatory structures for the gas market in the State; benchmark alternative regulatory and tariff structures; recommend a near-term regulatory structure that recognised the undeveloped nature of the gas industry in Tamil Nadu; and, recommend a plan for evolving a more refined regulatory structure as the gas market developed and matured.
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