KG-D6 supply to power projects zero since March

The petroleum ministry in a written reply to the standing committee on finance has admitted that gas supply to the power sector from the KG-D6 block has been reduced to zero since March due to the massive drop in production. "Thirteen power plants with capacity of 4,904 MW and high dependence on KG-D6 gas are stranded. Moreover, many developers almost ready to commission gas-based power capacity of around 8,000 MW with an investment of Rs 40,000 crore are at risk of becom-ing non-performing assets (NPAs) due to non-availability of indigenous natural gas," the ministry further said replying to the question of the committee on impact of non-availability of gas on power projects.

The committee was also informed of the scary picture of the power sector. The power ministry said that gas-based installed capacity in the coun-try is operating at very low average (24 per cent) due to the production slump in KG-D6. "If the gas is not made available to the newly commissioned and existing power projects, these plants would become NPAs causing huge loss to developers and the banking sector."

The committee also enquired as to why no penalty was imposed on the contractor for non-performance. The petroleum ministry admitted that the contractor failed to implement the development plan i.e. the amended ini-tial development plan (AIDP). The com-mittee was told that this observation was part of the notice sent to Reliance Industries Ltd on May 2, 2012, which has gone under arbitration.

"The contractor has made capital expenditure for creating gas production, transportation and processing facilities for a peak production rate of MMSCMD whereas the contractor failed to adequately utilise the facili-ties so created to achieve the targets with respect to the gas production rate as approved in the AIDP," the ministry added.

When asked as to what reasons did the contractor give for the decrease in production, the ministry replied, "The contractor said that there seem to be reservoir constraints in achieving the gas production rates.

From Mail Today, dated July 18, 2013 edition