State-run power utility NTPC has signed an agreement to buy gas from GAIL India for 10 years at a delivered price of close to $8 per million British thermal unit (mBtu).
NTPC will buy 2 million standard cubic meters per day of gas for 10 years beginning fourth quarter of 2009, a company official said.
GAIL has committed to sell the liquefied natural gas (LNG) to be imported from Qatar at Petronet LNG's Dahej terminal in Gujarat. The ex-terminal price will be the pooled price or the average of long-term and short term LNG being imported by PLL.
The pool price currently is $6.29 per mBtu without including the cost of transportation, taxes and marketing margins. The delivered price at NTPC plants, the official said, will be close to $8 per mBtu.
The price is higher than $4.2 per mBtu rate at which Reliance Industries sells gas from its KG-D6 fields. The delivered price of KG-D6 gas at NTPC's plants in Delhi would be $6.7 per mBtu.
Industry sources said government has offered KG-D6 gas to NTPC but the firm has chosen to buy expensive imported fuel. It has in fact floated another tender to buy 1.9 mmsmcd of gas for six months beginning September. Besides GAIL, Indian Oil and Bharat Petroleum are likely to bid for the tender quoting the R-LNG pooled price.
