GAIL, Pragati Power sign gas supply agreement

GAIL India, the country's largest transporter and marketer of gas, has signed a gas sales agreement with Pragati Power Corporation for the supply of 2 million cubic metres per day (mcmd) of regassified liquefied natural gas (R-LNG) for its 1,500 mw power plant at Bawana near Delhi.

Indian Oil Corporation (IOC) and Bharat Petroleum Corporation (BPCL) will together supply another 4 mcmd of gas to the power plant.

The entire 6 mcmd will be sourced from Petronet LNG's regassification plant at Dahej in Gujarat.

GAIL has already signed transportation agreements with IOC and BPCL, according to its chairman and managing director UD Choubey.

The gas will be transported from Dahej to Dadri through an existing pipeline. GAIL will lay a new pipeline from Dadri to Bawana at an investment of Rs 5,000 crore to transport the gas to the power plant, which is likely to be fully commissioned by October 2010.

"Two compressor stations will also be set up along with the pipeline. The total investment in the pipeline and the compressor stations will be around Rs 5,000 crore," GAIL said in a statement.

"GAIL is confident of laying this pipeline to synchronise with the power plant," Choubey said.

The gas supply to the power plant will begin from October 2009 and go on till 2024. Pragati Power recently received environmental clearance for the plant and construction is expected to begin soon.

GAIL added that the re-gassified LNG will be supplied to Pragati Power's Bawana plant in line with the petroleum ministry's policy of pooled pricing. The ministry had decided, earlier this year, that prices of LNG in the country would be the average of cheaper older contracts and more expensive new contracts. This policy has resulted in a price increase for older buyers of R-LNG and lower prices for new buyers.

The peak demand for electricity in Delhi is slated to grow from the current 4,100 mw to 5,630 mw in 2010, according to estimates by the Central Electricity Authority. The Bawana power plant will more than double the current generation of 1,300 mw in Delhi.

PTI adds: Reliance Industries, which gave the nation its largest gas field, has discovered crude oil reserves in a block off the Tamil Nadu coast.

Reliance made a significant oil discovery in the very first well it drilled in the Cauvery basin block CY-DWN-2001/4, also known as CY-D5.