Reliance Industries, GAIL and Andhra power producers have signed agreements involving swapping of gas to ensure additional gas supply for generating 600 Mw power in the state.
Thursday’s agreement would enable supply of another 2.594 million standard cubic metres of gas per day to power units in Andhra. The resulting power production of almost 600 Mw is important for farmers of the state, said a petroleum ministry statement. The agreement was signed in the presence of the minister, S Jaipal Reddy, who is a Congress MP from the state.
This additional energy would energise 2.9 million pump sets during the coming summer and would help farmers in watering the rabi crop. Replacement of the current fuel, naphtha, by gas would help the state government to save around Rs 250 crore annually.
Andhra Pradesh does not have connectivity to a Liquefied Natural Gas (LNG) unit. Further, Regassified LNG from plants located in Gujarat cannot flow from west to east against the KG-D6 offshore field’s gas flow from east to west. Swapping of RLNG with GAIL’s KG-D6 allocation is part of the plan. This involves diversion of KG-D6 gas from GAIL’s LPG plants to independent power producers in Andhra and compensating an equivalent quantity of RLNG procured by IPPs through GAIL. Andhra power disctribution companies are willing to pay, apart from the cost of RLNG, requisite costs like marketing margin, transportation charges, inter-state and intra-state taxes, whichever applicable, on account of the proposed swapping.
Apart from ensuring additional gas to customers in Andhra Pradesh, the arrangement would also form the basis for supplying RLNG to areas not physically connected to LNG terminals.