The Hindu Business Line : Bidadi gas project: Cos fail to submit price bids

THE three technically qualified bidders for the 1400 MW Bidadi gas power project — Reliance Industries Ltd, ONGC Ltd and Indian Oil Corporation have failed to submit their price bids even after seeking an extension till December-end.

The State-owned Karnataka Power Corporation (KPCL) had promoted the Bidadi as an inter-State mega project and was on the verge of entering into a power purchase agreement with Power Trading Corporation Ltd. With the abstention of the technically qualified participants, KPCL officials admitted, it was virtually curtains down for its gas ambitions.

One of the major reasons for the abstention of the public sector was that none of them had tied up with their potential suppliers. ONGC had planned to source the gas on a fixed price contracts with some producers in either Qatar or Sudan. IOC had planned to source the gas from Petronas, Malaysia to Kakinada and pipeline it to Bidadi. None of the intending suppliers were in a position to meet domestic public sector terms for the fixed price contracts, particularly in a situation where the largest importers of gas, US, Europe Japan and Korea were prepared to pay market linked prices either indexed to the New York Mercantile exchange price or the Japanese crude cocktail price. Both these prices are now at about $6 - $7 per million British thermal units (MMBTU).

Reliance was also not prepared to extend the same terms of supplies to NTPC's plants in Gandhar and Kawas to KPCL. RIL had quoted $2.97 per mmbtu for NTPC. RIL was expected to source the gas from the Krishna-Godavari Basin and was the only domestic supplier. KPCL was looking for a tariff of $3 per mmbtu for 15 years for a firm supply of 1.4 million tonnes per annum (about 73 million British thermal units (51.81 mmbtu = one tonne). This was the estimated requirement of Bidadi at 85 per cent plant load factor.

This is the second time that the KPCL's Bidadi plant is facing the jinx. Unocal, which was the joint venture partner for the project, had exited in 2002.

The sources said that KPC would now look for alternative options, though there were few on hand at the moment. One of the options being considered was alternative supply sources through the negotiated route. The sources said that this would include re-examining the option of sourcing the gas from Kochi through the Gas Authority of India Ltd. Petronet is setting up a 2.5-million-tonne per annum terminal in Kochi with regassification facilities, sourcing the gas from Ras Gas of Qatar. KPCL admitted the price for alternative sources would be higher.

Alternatively, the sources said KPCL would revisit the proposal of setting up a gas handling terminal in Mangalore on its own or as a joint venture, sourcing the gas directly from West Asian suppliers on a CIF basis (cost insurance and freight). This option would also be expensive, the sources said, though it planned to keep the gas tariffs for power low, by cross subsidising the same with supplies to other industrial sectors and transportation. But, this was still at the proposal stage, the sources admitted and clearance would have to come both from the State and the Centre. Even after these clearances, the sources admitted, power tariffs would not be anywhere close to the estimated Rs 2 per unit estimated initially.

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