GPEC Bharuch plant runs into trouble

Cairn Energy's gas well in western India dries up

The 655-MW power plant run by Gujarat Powergen Energy Corporation Ltd (GPEC) at Bharuch district has been operating much lower than its capacity due to the acute shortage of gas supply.

Cairn Energy, the main gas supplier for the plant failed to supply required quantity as its gas fields have recently got dried up.

On Thursday, in a major landmark decision, the state government has decided buy naptha and use it as fuel for GPEC plant so that GPEC plant resumes normal operations. GPEC, in turn, would supply 200 MW of power to Gujarat Electricity Board (GEB).

While disruption in supply of Liquefied Natural Gas (LNG) by GAIL India Ltd, one of the stakeholders of Petronet LNG Ltd (PLL) has already caused disruptions of normal power generation activities in the five gas-based plants in Gujarat, GPEC plant now started running at least 200 MW lesser than its capacity, pushed the state government before a challenge to meet the power demand in the state.

As a result of the five gas-based plants now also facing the threat of closure, the state government has also decided to buy 250 MW of power in addition to 200 MW from GPEC from Kawas plant being run by National Thermal Power Corporation (NTPC).

"Since almost last two-three weeks, gas supply from Cairn Energy to GPEC has been reported to be almost nil which has been hitting power generation in the Bharuch plant of the Corporation. We have now taken up the matter with Cairn officials as this is going to hit the power scenario in the state badly," said Saurabh Dalal, Minister of State for Energy.

Dalal also said that with Cairn officials buying time for resumption of supply of committed 2.1 MMSCMD of gas to GPEC, GEB will now pay Rs 4.91 per unit of power it would buy from GPEC as a cost of naptha, which will be used as a replacement for gas, earlier being supplied by Cairn, which recently hit huge reserves of gas and oil in the country.

GPEC and Cairn earlier entered into as Gas Purchase Agreement (GPA) following which GPEC started getting 2.1 MMSCMD of gas from the later. Cairn which was only a couple of months back, was producing 3.7 MMSCMD of gas from its Lakhmi field in Rajasthan and another 1.2 MMSCMD of gas from the Gauri gas field in Rajasthan, now reportedly has been able to produce only 2.1 MMSCMD of gas from these two most important gas fields which led to the crisis.

While Cairn officials could not be reached, a source close to the company said, "There are recent problems of water coming out from the wells along with problem of drying up of wells. Work is on to revive normal gas production which may take at least a month's time."

It may be recalled here that three years back, in 2001, PowerGen Plc of UK, picked up stake in Gujarat Power Corporation Ltd (GPCL) in the 655-MW Gujarat PowerGen Energy Corporation (GPEC) for a consideration of Rs 288 crore.

Before this deal, PowerGen had picked up 46.3 per cent equity in the erstwhile Gujarat Torrent Energy Corporation (GTEC) from the Torrent Group for Rs 1,065 crore, adding to its existing equity exposure at 28 per cent.

Besides, PowerGen, TPGL is also looking for other prospective foreign investors, mainly companies in the same sector business while a search for a 'suitable partner' from within India also has been initiated.