Online edition of India's National Newspaper
Wednesday, Jun 13, 2007
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Online edition of India's National Newspaper Wednesday, Jun 13, 2007 ePaper |
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Andhra Pradesh
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Hyderabad
A. Saye Sekhar
HYDERABAD: Independent of the price of natural gas supplied by the Reliance Industries Limited (RIL) from the Krishna-Godavari Basin, the State Government is confident of ensuring supply to the 2,700-MW power generation units at US $ 2.5 to US $ 3 a million British thermal unit (mbtu). The RIL is proposing that the gas price be fixed between US $ 4.5 and 6 per mbtu. The State is insisting on taking coal equivalence for gas price which works out to US $ 2.5 to 3 an mbtu. The State has already urged the Centre to allot the requirement, estimated between 9 and 10 million cubic metres a day (MCMD), to the power projects from the Centre's share of 20 per cent of the gas produced in K-G basin.
More than happy
Even if gas supply at this price is restricted only to power projects, the State will be happy. For it works out to be cheaper, even at US $ 4.5 an mbtu, than CNG, LPG, petrol and diesel and it is beneficial to consumers, says Advisor to the State Government on Economic Affairs D.A. Somayajulu. He also points out that the Centre, while fixing the gas price, shall take into account the cost of exploration plus a reasonable return on investment. It can't be left on the market forces, as it is only theoretical. Explaining the coal equivalence, he says a cubic metre of natural gas generates 10,000 kilo calories of energy, while a kg of coal generates 3,500 K. Cal. The average price of coal for non-pithead projects does not exceed Rs. 1 per kg. Burning of three kg of coal matches the calorific value of a cubic metre of natural gas. This translates to Rs. 3 in money terms, while the natural gas per cubic metre is priced at Rs. 3.80. Besides, capital cost of coal-fired power generation is costlier than gas-based generation.
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