The Hindu : Andhra Pradesh News : Changes in gas purchase pact between GAIL, power producers

Online edition of India's National Newspaper
Wednesday, Nov 24, 2004

Andhra Pradesh

Andhra Pradesh

Changes in gas purchase pact between GAIL, power producers

By M. Malleswara Rao

HYDERABAD, NOV. 23. The Union Government and Gas Authority of India Limited (GAIL) have resolved to amend the gas purchase agreement between GAIL and four independent power producers (IPPs) in the State to provide for compensation if gas is not supplied to them at the committed rate.

The State Government and APTransco are pressing for such an agreement since a long time to neutralise the burden of "fixed charges" collected by GAIL from the IPPs for setting up facilities to transfer gas from the fields to the plants. The Centre and GAIL recently gave the green signal to the agreement when the issue was raised at a meeting of the Energy Secretaries of states chaired by the Prime Minister.

Extra burden

According to details available with Energy Department, Transco had to shell down Rs 500 crores towards the fixed charges to GAIL routed through the four IPPs--Lanco, GVK, Spectrum and BSES. These charges continue as extra burden on the consumers, especially in the non-agriculture sector, who are already groaning under "heavy" tariff.

If the agreement materialises, it may come as a great relief to the consumers as this will be applicable to the four pipeline projects too--Vemagiri, GVK Extension, Gauthami and Konaseema.

Sources told The Hindu that the State Government could also prevail upon the Ministry of Petroleum & Natural Gas to provide infrastructure support and take steps for early availability of gas to the State's projects from Reliance.

Direction to GAIL

The third gain scored by the State at the meeting was a direction to GAIL to take necessary steps to ensure supply to these projects by June 2006 out of the extra availability, if any.

These projects were given a "firm allocation" of 6.7 MCMD but the Government has serious doubts going by the fact that GAIL is not able to fulfil even "fallback" commitments to some of the existing plants, the sources said.

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