Ministry assures gas supply to power projects: report
21 December 2009
In an attempt to resolve fears that upcoming gas-based power projects may not get the fuel supply they need, the petroleum ministry has asked state-run GAIL India to send ''comfort letters'' assuring gas supplies so that the developers can raise finances, according to a Business Standard report.
Quoting unnamed ''top sources'', it said that under the new dispensation, GAIL would assure gas supplies when the projects become operational, but the price would be the prevalent market rate.
Some developers had said they could not begin work on projects in absence of a bankable gas supply contract, and the new arrangement would help them get finances from banks and financial institutions.
Upon completion of the power plants, the government will allocate fuel to them from domestic fields like those of Reliance Industries' Krishna-Godavari block off the Eastern coast.
In case domestic gas was not available, GAIL would import liquefied natural gas (LNG) and supply it to them at market rates, the report said.