News Detail

• Ashok Kumar Khurana, Director General of the Association of Power Producers tells CNBC-TV18 that gas pooling is the only viable option to save gas based capacity. "Capacity constraints exist, but these capacity constraints are there because there is no demand. The moment we create demand, the capacity will chase," he said.

• He further adds that the Central Eletric Authority (CEA) has called a meeting on the 26 to discuss the same.

• Q: APP has recommended gas pooling to meet the shortfall of the domestic gas availability. One concern raised is about the storage of this LNG capacity. Could you walk us through that and how do you plan to resolve it because numbers that we have is that the required import of LNG in FY13 is about 29 mmscmd and the total capacity of import gas only stands at 18 mmscmd?

• A: I agree that there is a capacity constraint to import the gas, but these capacity constraints are there because there is no demand. The moment we create demand, the capacity will chase. Whether it is Dahej, Hazira or Kochi, they all are gearing up for capacity increase. If you see their plans, they are not increasing capacity or putting investment because they are not sure of demand. Once we go for gas pooling concept, which is good for the entire sector, that capacity will chase demand immediately.

• It may not come up quickly, but in the next 7-8 months this capacity can come up like Dabhol will be ready in next month. We can expand Dabhol's capacity further, you can easily have floating platforms if this capacity is not adequate and floating platforms can come in 12-14 months.

• Our idea is that if you adopt as a concept then the private sector and the public sector can work towards it to meet the demand requirement. You have about 28,000 mw of gas capacity completely standard. If you are not pooling and if you only think the existing projects the gas available will bring them down to about 45% plant load factor (PLF) and technically speaking gas projects cannot operate below 50% PLF. Therefore to save this entire capacity of 28,000 only viable option is gas pooling and advantage is that we have the arbitrage of pricing which is domestic gas pricing around Rs 4.5-5 and even if you have to import USD 18-19 per mmbtu the price is affordable by the power sector for simple reason that today in Andhra Pradesh, Tamil Nadu you have 15-18 days power cut to industries and commercial establishments.

• Q: Is the government open to this idea, did you speak to Mr. Pulok Chatterjee and put forth this plan and what was his response? Also, what is GAIL's response because I believe you all want GAIL to be the pool operator?

• A: This idea has been accepted by Ministry of Petroleum and Natural Gas ( MoPNG). It is they only who made a presentation. I met PS to the Prime Minister; he also had concern on the affordability of the power produced by pool. We have done our numbers; we will be writing to him that power at the maximum of USD 20 would turn to about variable cost of Rs 4.80.

• If you compare power of gas and coal, the gas capital cost is less; it's around 75-80 paise only and then we are suggested even if you find the base stations cannot run you can reserve the gas for peaking power, in country we have huge peaking power shortage and we have arrangements also of differential tariff in the day so peaking power can always be more expensive and gas can be reserved for peaking capacity for which we have huge shortage, they all are considering these things, in fact, the CEA has called a meeting on 26th to discuss this concept in detail.

• Q: Would you expect opposition from some power plants which are getting subsidized gas USD 4.6 per mmbtu would they oppose it?

• A: There might be opposition for the sake of opposition but it is not impacting them because all gas plants are pass through so their variable cost is pass through. Question is whether the country needs that power or not. Even if you do not pool the existing plants, next year they will not be able to operate because KG D-6 basin will touch only about 5 or 7 to power which will actually make the private sector existing plants completely non-operatable.

• In fact, MOP calculation shows on a macro level the gas available all plants will work at 44.5 PLM, so on macro all are not operable, so some will come up who have the earlier gases other new plants will close there. You have a choice between running about 8,000 to 9,000 megawatt of power are salvaging the entire 28,000 megawatt of power.

• Q: Is the Pulok Chatterjee committee doing anything about payment for power that is already being made? We saw some decisions being taken on coal fuel supply, so what is the next tranche of decisions and will that have anything to do with Discoms.

• A: That is being looked after by BK Chaturvedi committee in the Planning Commission. He is having meeting with different states and doing the financial research. While they are looking at the increase in variable cost, whether it is coal or gas, we need to move to a different paradigm in power sector.

• In that, I will refer to the latest directive issued by MOP regarding the open access. We need to accept as a venerable section of society which needs slightly cheaper power. So vest all the PPAs which are making low cost power for that vulnerable. People above 1 megawatt they should be open to complete open access on bilateral price bases which is the directive and the act demands that. Unless we move that to the system quickly there is going to be issue of power because today the demand and the price of power is not being governed by consumer and his requirements it is being governed by intermediaries DISCOMs who are bankrupt.

• My idea is we need to have universal obligation put on DISCOMs and they giving power to selected section of society which cannot afford expensive power but a commercial establishment and industries whose coping cost today is Rs 13-Rs 14. They would love to have power at Rs 6.5-7 which is clean power, reliable power and quality power.

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