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Power units to bear higher cost of Qatar gas

NEW DELHI: The power and fertilizer units will have to shell out a higher price for the natural gas they consume as Qatar based RasGas has indicated that the new chunk of liquefied natural gas (LNG) would be supplied to India’s Petronet LNG at a much higher rate. The old LNG agreement with RasGas is set to expire by this year end and from January next, the gas will come with a 30-per cent price increase. This will be passed on to the customers of the natural gas putting, power and fertilizer units under pressure.

Official sources said RasGas had been selling five million tonnes of LNG at fixed pre-shipping cost or FOB price of $2.53 per million British thermal unit since 2004. The five-year fixed price period would end in January when the price would move to a price band linked to Japanese Crude Cocktail (JCC). From January, FOB price would move up to $3.12 per mmBtu. To this, a $0.26 would be added as shipping cost and $0.169 as five per cent customs duty to arrive at a delivered price of $3.549 per mmBtu.

Sources said Petronet would then charge $0.55 per mmBtu as re-gasification charge and another $0.50 would go towards pipeline tariff and marketing margin.

After adding sales tax the delivered price would be $5.5188 per mmBtu in January. But the FOB price would change every month based on the moving average of JCC and the price would have to be calculated accordingly. The FOB price in January 2010 would reach $4.25 per mmBtu, $5.59 in 2011, $6.91 in 2012, $8.24 in 2013.

Though the ex-terminal price of RasGas LNG works out to be $3.86 per mmBtu now, customers are being charged $4.93 per mmBtu to subsidise the price of gas supplied to the beleaguered Dabhol power plant. The rise in gas price from Petronet would mean that the electricity generation cost and fertiliser rates would also undergo a corresponding increase.

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