Like any growing economy, India is fuel-hungry . Most of its gas-fired power plants run at less than 40 per cent of capacity - a total of 18,900 MW - because there's not enough fuel. They need 85 million metric standard cubic metres (MMSCM) of gas daily to run at 90 per cent of capacity, but only 35 MMSCM a day is available, as Power Minister Jyotiraditya Scindia recently told Parliament. And demand is rising. Gas accounts for about nine per cent of the country's power generation capacity.

Perhaps nobody in the country is more concerned about gas availability than Kiran Kumar Reddy, Chief Minister of Andhra Pradesh (AP). His state could well play a pivotal role in the country's power generation. Nine of the country's 64 gas-based power plants are located there. The state is planning to import liquefied natural gas (LNG). Three units for receiving more than 14 million tonnes per annum (MTPA) of imported LNG are coming up in Andhra Pradesh and will be operational in three years, making the state's coast a hotspot in the country's gas economy.

Among these is a five MTPA terminal at Gangavaram port, being set up by Petronet LNG, the country's top LNG importer, at an estimated cost of Rs 4,500 crore. Reliance Power, Royal Dutch Shell and Kakinada Seaports are jointly planning a receiving terminal with a floating storage and regasification unit (FSRU).

This is essentially a special ship that can convert liquefied gas back into gaseous form so that it can be transmitted through a pipeline. FSRUs are easy to set up, cheaper than onshore terminals, and expandable in modular fashion. "The project will be complete by 2014," says a Shell India spokesperson. It will be expandable to over 10 MTPA.

Another FSRU for four MTPA is being set up jointly, also at Kakinada, by the Gas Authority of India Ltd (GAIL) and the state-owned Andhra Pradesh Gas Infrastructure, with assistance from the UK-based GDF Suez LNG. "The unit is expected to be commissioned by 2013," says GAIL Chairman and Managing Director B.C. Tripathi.

Not only is Kakinada close to the Krishna-Godavari Basin, which yields about 25 MMSCM of gas a day, but it is also connected with Gujarat through Reliance Industries' 1,440-km gas pipeline. Gujarat consumes more than 70 per cent of the gas available in the country.

AP is second only to Gujarat in terms of the number of gas-based power plants. The state government reckons that LNG imports would help reduce the cost of electricity from Rs 9 per unit to Rs 5 or Rs 5.50. "Gas imports would boost gas-fired power generation in the country," says Aashish Mehra, Partner and Managing Director of the India and Asia-Pacific Practice of the Strategic Decisions Group. International LNG prices are falling as the US - the world's biggest LNG market - is increasingly using domestically produced shale gas. "Having a terminal on the east coast is a good idea - you open the country to gas imports from almost every corner of the world."

Currently, India's capacity to import LNG is 13.6 MTPA, and it is all in Gujarat (10 MTPA at Petronet's terminal at Dahej and 3.6 MTPA at the Shell and Total joint venture at Hazira). In the next couple of years, it will go up by 23 MTPA, as two more units come up in Gujarat, and one each in Kerala, Maharashtra and Tamil Nadu.

Together with the facilities in AP, they will more than treble India's import capacity in the next three years.

Anilesh S. Mahajan