NTPC opens tender for LNG supplies to Kayamkulam unit

National Thermal Power Corporation (NTPC) has opened the tender for two million tonne of liquefied natural gas (LNG) supplies for Kayamkulam unit at Allappuzha, Kerala.

It is also planning to call new bids for additional supply of LNG for its gas-fired units at Kawas and Gandhar. NTPC, the country's largest power generation company, has planned 9,370 mw capacity expansion during the Tenth plan and 11,558 mw in the Eleventh plan.

While majority of this capacity expansion will be based on coal-fired units, it is also looking at hydroelectric power projects as well as gas-based power projects.

C P Jain, chairman and managing director of NTPC told mediapersons here, "NTPC yesterday opened tenders for LNG supplies and will soon go in for commercial bids. We will open new tenders for additional gas supplies for Kawas and Gandhar on November 15 and December 1 so that the orders are placed for LNG before March 1."

Jain was speaking at the roadshow of the company's public issue which opens on October 7, 2004. To meet its gas needs for gas-based power stations, NTPC has commenced competitive bidding.

At Kayamkulam, NTPC is planning capacity addition of 650 mw in the Eleventh plan and 1,300 mw in the Twelfth plan. Jain pointed out that if the cost of LNG was more than $3 per btu (British thermal unit), it will not be viable to put a power plant based on LNG.

"If prices are above $3 per btu, we might look for other fuel options such as coal as we have to be competitive in our tariff offering," Jain said. On gas supply agreement with Reliance Industries, Jain pointed out that though the corporation has yet to sign an agreement, the "letter of award to Reliance is binding".

Reliance has offered gas at $2.97 btu. NTPC is also entering coal mining as part of its backward integration plan and has applied to the ministry of coal seeking allotment of coal blocks in the Talcher and north Karanpura coalfields in the eastern regions.

NTPC is evaluating two options, a joint venture route or set a separate business unit to enter captive coal mining.

Meanwhile, NTPC has raised $350 million foreign currency convertible debentures from Korea's Exim Bank at an interest rate of 5.05 per cent.

P Narasimharamulu, director (finance), NTPC, said the loan is linked to equipment supplies with 12-year repayment. NTPC is doubling its capacity to become a 40,000 mw company by 2012.

It is raising funds through issue of equity shares which will be used mainly to fund equity component of the capacity expansion programme. The proposed issue, a mixture of fresh issue and an offer for sale from the government of India, is of 865,830,000 equity shares of Rs 10 each.

The public issue is being made through a 100 per cent book-building process. The price band for the issue is fixed at Rs 52 to Rs 62 for equity share of face value Rs 10. Following the issue, the government holding in the company will come down to 89.5 per cent.