BSES, GAIL put power projects on hold

Mumbai: The Bombay Suburban Electric Supply-Gas Authority of India Ltd (BSES-GAIL) joint venture has decided to put two of its proposed power projects on hold because a dispute has arisen with ONGC over the supply of fuel. The construction of these two projects - one in Delhi and the other in Gujarat (400 mw each) - was supposed to be started this year.

“The fuel prices offered by ONGC are much higher than those offered by GAIL, our JV partner. We have asked that the prices be on a par with that of GAIL's,“ BSES officials say. “The promoters of these power projects have already signed a 10-year fuel-purchase contract with ONGC, and the contract clauses insist that the promoters have to purchase fuel for the stipulated period in the agreement.“

“We cannot terminate the contract at one go; we rather prefer to put the project on hold till the dispute gets resolved,“ the officials say. “The other reason for the delay is ONGC's inability to supply adequate quantity of gas. The capacity of these projects is 400 mw each, but the ONGC can provide gas only for 200 mw and that too only for seven years. We are also in talks with them to see if they can arrange gas for 400 mw and also for a longer term.“

BSES-Gail had proposed these joint venture projects around two years back and the promoters have obtained almost all the necessary approvals from the respective state governments. But the power purchase agreements with the state governments have not been signed so far. BSES's Saphale project in Maharashtra had also hit a roadblock due to differences of opinion with ONGC over the supply of fuel.