Qatari gas to the rescue of Indian power plants

14,000-Mw of stranded capacity might get fuel from beleaguered Arab nation

Despite its darkening political horizon, Qatar might turn out to be the saviour for 14,000-Mw stranded power plants in India. The two are in talks to create a special purpose vehicle (SPV) that will provide gas to revive these distressed units.

Of the 24,150 Mw gas-based power plants in India, 14,305 Mw are stranded or partly inoperative because of paucity of gas.

“We are in talks with Qatar to form an SPV. Qatar is a producer and supplier, and we can provide a market here,” Union Petroleum Minister Dharmendra Pradhan told Business Standard.  

He added that recent political developments, such as other Persian Gulf nations Saudi Arabia, Egypt, the United Arab Emirates, Yemen, Libya and Bahrain severing diplomatic ties with Qatar, citing it was supporting terrorism, would have no effect on the country’s gas supply to India.

Petronet LNG, the largest gas importer in India, gets liquefied natural gas (LNG) worth Rs 18,000 crore per annum from Qatar’s Ras Laffan Liquefied Natural Gas Company (RasGas).

“In the initiative to revive power plants, RasGas is likely to be our partner,” the minister said.

Petronet LNG buys 8.5 million tonnes of LNG per year from Qatar under a long-term contract; it also takes gas in spot deals. Every month, 10 ships of gas come to India from Qatar. The value of gas per ship, which carries about 150 cubic metres, is to the tune of Rs 150 crore.

According to reports, in 2016-17, the power units operated at a plant load factor of a mere 22.51 per cent, producing only about 49 billion units of electricity. As a result, investment of about Rs 60,000 crore could become non-performing assets.

The remaining capacity (9,845 Mw), with an investment of about Rs 40,000 crore, was working at a sub-optimal level, based on the limited quantity of domestic gas in India.

The sanctions against Qatar, which played a major role in making OPEC and non-OPEC nations agree to cut crude oil output last year, were increased because of the support that it provides to the Muslim Brotherhood and Iran.

About 85 per cent of India’s crude oil import, 70 per cent of natural gas, and 95 per cent of LPG come from OPEC countries. “Nowadays, more than margin, producers are looking at market security. That is what India can provide to countries such as Qatar and players like Saudi Aramco,” Pradhan added.

On Iran signing an initial pact with Russia’s Gazprom to developing the Farzad-B gas field, for which India was also in the running, the minister said, “Our relationship with Iran is not based on a single commodity or a single transaction. We want viability for our investments.”