120-km link between Puthuvype terminal and NTPC Kayamkulam

Work on the 120-km gas pipeline linking Petronet LNG's Puthuvype terminal with NTPC Ltd.'s generation facility at Kayamkulam is unlikely to begin soon with the crucial Power Purchase Agreement (PPA) between the Kerala State Electricity Board (KSEB) and NTPC hanging fire.

It would not be possible for GAIL (India) Ltd., formerly Gas Authority of India Ltd., to begin work on the project unless a Gas Transfer Agreement (GTA) with NTPC is in place, sources said on Tuesday. The pipeline, a major portion of which would pass under the sea, would cost between Rs.700 crore and Rs.900 crore.

The Union Ministry of Environment and Forests (MoEF) cleared the project on Tuesday. Minister for Power Aryadan Mohammed is expected to take up the issue of PPA with NTPC during his visit to New Delhi on Friday.

KSEB sources said there had not been any progress on the PPA front as power from NTPC's augmented capacity would be too costly for the board. The board has been buying power from NTPC's other generation facilities at Talcher and Ramagundam at cheaper rates though it might not be viable in the long-term, sources said.

The cost of power from NTPC Kayamkulam is likely to be high because the landed cost of natural gas is now projected to be in the higher bracket. (Landed cost is calculated on the basis of freight, insurance, import duties, countervailing duty, and other costs).

NTPC has a 350-MW generation capacity at Kayamkulam. The plan is to raise generation by another 1,050 MW in the second stage, using natural gas from the LNG terminal in Kochi. NTPC would require between five to 5.5 million metric standard cubic metres (MMSCM) of gas for the augmented facility.

Sources said GAIL would hold hydro-testing of the first phase of the pipeline project, involving the linking of the LNG terminal to Udyogamandal and Ambalamugal in December. The 43-km pipeline, costing Rs.340 crore, will mostly serve the public sector Fertilizers and Chemicals Travancore.

Work will begin in December on the 900-km Kochi-Mangalore-Bangalore pipeline, which is expected to cost Rs.3,200 crore.


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